Bandhan Bank Faces Deep Cuts After CEO Resignation: What Does the Future Hold?

Chandra Shekhar Ghosh, the Managing Director and Chief Executive Officer of the Bank since July 2015 announced that he would retire from the services of the Bank as the MD and CEO upon completion of his current tenure on July 09, 2024. Chandra Ghosh had set up Bandhan way back in 2001 when it was an NGO for women’s empowerment and poverty alleviation, it only became a bank in 2014 when RBI issued its licence. Chandra Ghosh holds a strong connection with Bandhan Bank and his exit has not pleased the markets. 

Temperature Check on Markets

The markets are not happy with this sudden resignation and many believe this move will complicate the bank’s growth considering that the board had already approved the re-appointment of Chandra Ghosh as MD&CEO for three years in November 2023. 

The market believes his resignation could significantly mess with the overall growth and profitability of the bank and the timing of his resignation is at an awkward juncture as the bank is still seeing elevated asset quality stress and the two executive directors are quite new to the bank and there have been multiple senior exits in the last couple of years. 

Unsure Management

There’s not much clarity over who will take over the bank while reports suggest that the bank might be looking outside the firm to bring in the top head because as previously mentioned, apart from Ghosh, many of the executives are quite new to the bank and key personnel have left the bank in the last couple of years and because of that the market thinks the stock price ahead could move cautiously against the financial performance until more clarity emerges on MD and CEO succession.

Conclusion

Chandra Ghosh held a legacy within Bandhan Bank and when the founding personnel leave it always rings bells of caution regarding if or not the bank can follow its set path with the same vision, until that is cleared up at Bandhan Bank, the markets will stay weary about the bank despite the good performance. Banks heavily depend on the management who’s running it and the markets cleary don’t want to risk it.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.