Shares of Bandhan Bank declined sharply today on March 16, falling more than 8% during the trading session after the Election Commission announced assembly election dates for several states where the bank has significant exposure through its microfinance portfolio.
The stock was trading around ₹161.41, down about 8.03%, after opening at ₹175 and touching an intraday low of ₹153.94. The decline came despite broader market participation in banking stocks, as investors reacted to potential risks linked to the bank’s regional exposure ahead of state elections.
Over the weekend, the Election Commission announced polling dates for key states including Assam, Kerala, Puducherry, Tamil Nadu and West Bengal. Among these, West Bengal and Assam are particularly important for Bandhan Bank given their large contribution to the bank’s microfinance and emerging entrepreneurs’ business (EEB) portfolio. Polling in West Bengal is scheduled for April 23 and April 29, while Assam will go to the polls on April 9.
Analysts noted that Bandhan Bank has a cumulative exposure of nearly 45% of its EEB and microfinance portfolio in these two states, making the stock sensitive to political developments and policy announcements in the region. Election periods in states with large microfinance exposure often raise concerns among investors about the possibility of loan waiver announcements or repayment disruptions, which can impact asset quality and collections.
While there has been no official indication of any loan waiver announcement so far, market participants remain cautious given the historical sensitivity of microfinance lenders to political developments during election cycles. The uncertainty surrounding policy measures and borrower behaviour in the run-up to elections has therefore triggered selling pressure in the stock.
Bandhan Bank, which began as a microfinance institution before transitioning into a universal bank, continues to have a significant portion of its lending book linked to the microfinance segment. As a result, developments in regions with high microfinance penetration often have a direct bearing on investor sentiment toward the stock.