Bandhan Bank's record is not clean on its face: three years of unqualified audit opinions sit alongside recurring RBI penalties, a board that has cycled through three MD&CEOs and four auditor combinations in five years, and asset-quality metrics that are repeatedly flattered by technical write-offs and ARC sales. Two things deserve attention: reported credit costs exclude material stress that was shifted out through write-offs and portfolio sales, and the regulator has kept a nominee director on the board since June 2024.
Key findings
- Reported asset quality is flattered by write-offs, ARC sales and PSLC income
Major- Technical write-offs of ₹3,850 crore in Q4FY24 and ₹1,270 crore in Q3FY25 kept reported credit cost lower than it would otherwise have been; adjusted for these write-offs, credit cost would have been 1.9% in Q4FY24 and 3.1% in Q3FY25. A further technical write-off of ₹597 crore was undertaken in Q1 FY27 to reduce the NPA book, and a sale of ₹291 crore of housing NPA loans to an ARC generated ₹120 crore of cash recovery included in the quarter's recovery numbers. Gross NPA stood at 4.7% with a provision coverage ratio of 73.5%, but including technical write-offs the coverage ratio was 85.4%. - Recurring RBI penalties and a nominee director since June 2024
Major- RBI imposed penalties of ₹1 crore on October 29, 2019 for failure to reduce promoter NOFHC shareholding, ₹1 crore on July 6, 2021 for NBFC lending contraventions, ₹29.55 lakh on March 4, 2024 for deposit-rate non-compliance, ₹44.70 lakh on August 26, 2025 for income-recognition automation lapses, and ₹41.80 lakh on April 21, 2026 for KYC risk-categorisation non-compliance. RBI appointed Mr. Arun Kumar Singh as an Additional Director under Section 36AB of the Banking Regulation Act for one year from June 24, 2024, and extended his term twice, most recently to June 23, 2027. RBI also froze the MD & CEO's remuneration during FY2019-20 with no increment or performance-linked incentives paid. - Three MD&CEOs and capped promoter voting rights in three years
Major- Mr. Chandra Shekhar Ghosh retired as MD&CEO on July 09, 2024, Mr. Ratan Kumar Kesh served as Interim MD&CEO from July 10, 2024 to October 31, 2024, and Mr. Partha Pratim Sengupta was appointed effective November 01, 2024 for three years. Promoter Bandhan Financial Holdings Limited held 39.98% of paid-up voting equity capital as on the cut-off date for the August 2024 AGM, but its exercisable voting rights were capped at 26% under Section 12(2) of the Banking Regulation Act, with 22,52,63,614 of its 64,41,15,857 shares treated as invalid votes. Five independent directors ceased during FY2025-26, and the CFO resigned on June 29, 2026 with last working day September 25, 2026. - Four joint statutory auditor combinations in five years
Major- Deloitte Haskins & Sells was appointed at the 5th AGM on June 28, 2019 for four years, but RBI Guidelines dated April 27, 2021 capped auditor tenure at three continuous years, ending Deloitte's term at the 8th AGM in 2022. M. M. Nissim & Co. LLP was appointed at the 7th AGM on August 6, 2021, M/s. Singhi & Co. replaced Deloitte at the 8th AGM on August 10, 2022, M/s. V. Sankar Aiyar & Co. replaced M M Nissim at the 10th AGM on August 20, 2024, and M/s. V. Singhi & Associates replaced M/s. Singhi & Co. from the 11th AGM on August 21, 2025. Audit fees rose from ₹97 lakh per annum in FY2020-21 to a recommended ₹1.81 crore per annum for FY2026-27. - Reported profits are shaped by reserve transfers and a deferred-tax reversal
Major- Bandhan Bank recognised Income Tax recoverable of ₹460.10 crore during FY2025-26 with a corresponding reversal of deferred tax assets of ₹460.10 crore, resulting in no net impact on the Profit and Loss Account. The Bank recognised an additional gratuity liability of ₹121.39 crore towards past service cost during FY2025-26 due to the new Labour Codes, and management confirmed a one-time gratuity provision of ₹61 crore in Q1 FY27. Profit on sale of HTM investments of ₹53.93 crore and profit on sale of AFS equity instruments of ₹131.15 crore were transferred to reserves in FY2025-26, not routed through the Profit and Loss account. - Contingent liabilities are rising sharply
Minor- Claims against the Bank not acknowledged as debts rose to ₹402.36 crore in FY2025-26 from ₹280.77 crore in FY2024-25, including ₹239.97 crore for proceedings pending with tax authorities. Guarantees given on behalf of constituents rose to ₹4,276.55 crore in FY2025-26 from ₹2,008.19 crore in FY2024-25. The Income Tax Department issued a demand of ₹119.38 crore for AY 2023-24 on 25 March 2025, and GST penalty orders of ₹1,08,86,554 and ₹16,89,367 were issued in FY2025-26 with appeals preferred. - Unqualified opinions, but audit-trail exceptions persist across three years
Minor- The statutory auditors issued unqualified opinions on the standalone financial statements for the years ended March 31, 2024, March 31, 2025, and March 31, 2026. The auditors' reports on internal financial controls were also unqualified for all three years. However, for the year ended March 31, 2026, the auditors reported that the audit trail was not enabled throughout the year for certain accounting masters in respect of two accounting software(s), and that database-level logs record only modified values. - Off-balance-sheet obligations concentrated in lien-marked deposits
Minor- Lien-marked deposits stood at ₹7,213.40 crore as of March 31, 2026, up from ₹5,708.81 crore as of March 31, 2025. Loans outstanding purchased under Inter Bank Participation Certificate stood at ₹3,400 crore in FY2025-26, up from ₹980 crore in the previous year. The Bank has not raised any perpetual debt instruments for Additional Tier-1 capital or subordinated debt for Tier-2 capital as of FY2024-25, and Capital Adequacy Ratio was 18.04% as on March 31, 2026.
What to watch
- Income tax demand appeal. Outcome of the appeal against the Income Tax Department demand of ₹119.38 crore for AY 2023-24 issued on 25 March 2025.
- GST penalty appeals. Outcome of appeals against GST penalty orders issued in FY2025-26, including ₹1,08,86,554 (Mumbai) and ₹16,89,367 (Gujarat).
- RBI nominee director term. RBI's term for Mr. Arun Kumar Singh as Additional Director runs through June 23, 2027, per RBI letter dated June 19, 2026.
- MD&CEO variable pay approval. RBI approval for variable pay of MD&CEO Mr. Partha Pratim Sengupta for FY2025-26 remained awaited as of the FY2025-26 Annual Report.
- ECL implementation. RBI's Expected Credit Loss and Effective Interest Rate directions effective from April 1, 2027, as notified on April 27, 2026, will require Bandhan Bank to implement new provisioning and income recognition methods.
Bottom line: This is a disclosed and audited record with unqualified opinions and minimal related-party balances, but the character of the risk sits in two places: asset-quality metrics that are repeatedly flattered by technical write-offs and ARC sales, and a regulator that has kept a nominee director on the board since June 2024 while imposing penalties across multiple years. Read the credit-cost line with the write-off history in mind, and watch whether the RBI nominee's term, the pending tax appeals, and the ECL implementation change the picture.