Out of the driver’s seat, Bandhan’s Ghosh bats for longer bank CEO tenures for better long-term planning

In an interview to Mint, Ghosh, now chairman of the Bandhan Group, said leaders should get more time at the top, allowing them to bring a long-term perspective to the role. Ghosh, who stepped down as managing director (MD) and CEO of Bandhan Bank in July 2024, was referring to the practice of giving bank chiefs terms of three years at a time.

In November 2023, the board of Bandhan Bank reappointed him for another three years, but he announced his resignation in April 2024.

“Even parliament has a five-year term and bank managing directors have three years. So how will one plan?” said Ghosh.

The Reserve Bank of India (RBI) allows bank CEOs to remain in charge for 15 years or till they reach 70 years. For CEOs who are promoters or major shareholders of the bank, the regulator allows 12 years at the top.

Ghosh resigned at the end of his term on 9 July 2024 after leading the bank for almost a decade, including three consecutive tenures as MD & CEO.

Asked why he stepped down all of a sudden, Ghosh, 65, said there were multiple reasons. He said there were things he could not have pursued as the CEO due to regulatory restrictions. That apart, the bank was in the throes of migrating its core banking systems to Oracle in 2023 and he wanted to stick around for the exercise to conclude smoothly.

“I spent three nights in the office in October to see how things work and to motivate the team,” said Ghosh.

He said that one evening in late 2023, he found out that the bank had disbursed ₹30 crore of micro-loans instead of the daily average of ₹300 crore. Alarm bells rang and Ghosh and another senior executive went to two branches in Kolkata to speak to the staff there.

“They told us that they were not able to disburse because of a problem and therefore were turning customers away. This issue was soon resolved and disbursements went up,” said Ghosh.

Driver’s seat

Ghosh said he misses being in the driver’s seat at the bank he founded and said that promoters drive growth because they build institutions from the ground up.

“I am not contradicting the regulator or the government’s point of view. I feel that promoters have the heart of the organization and are not just looking for profit,” he said.

Experts said the regulator wants chief executives to have long-term plans and the three-year renewals are just for periodic status checks.

“The upper limit for a bank CEO is 15 years and not three years. The philosophy behind the three-year term at a time is for the regulator to frequently do a check on the executive and his/her performance,” said Abizer Diwanji, founder of strategic advisory provider Neostrat Advisors.

Diwanji said it is unlikely for CEOs to work on three-year plans and neither does the RBI expect them to do so. In fact, the RBI would not approve of someone who only has a three-year plan.

The Kolkata-based lender did have a few run-ins with the regulator regarding its promoter shareholding but that was eventually resolved.

Given that Bandhan Bank won its licence under the RBI’s 2013 guidelines, the bank was required to dilute promoter holdings to 40% within three years of starting its business, which was in August 2015, and was therefore required to cut the shareholdings by August 2018.

When that didn’t happen, the central bank restricted the expansion of Bandhan’s branch network and capped Ghosh’s remuneration in September 2018. In October 2019, the RBI imposed a fine of ₹1 crore on the bank for failing to meet this norm.

Curbs lifted

However, citing efforts made by the bank to reduce its promoter shareholding, the RBI lifted the restrictions in February 2020 with certain conditions. Six months later, the RBI also withdrew the curbs imposed on Ghosh’s remuneration.

Ahead of its initial public offering in March 2018, the promoters of Bandhan Bank owned 89.62% of the equity share capital.

Ghosh told Mint that diluting stakes to 40% is not an easy exercise. Bandhan Bank was finally able to comply in August 2020 when it sold shares in the secondary market, reducing the promoters’ holding to 40% from about 61%. The next round of dilution needs to happen by August 2030, when the promoter holding should fall to 26%. Asked how this would be done, Ghosh said that a plan has not yet been prepared.

Indian banks have attracted considerable interest from foreign strategic investors, with recent deals such as Yes Bank-SMBC and RBL Bank-Emirates NBD Bank lighting up the sector with capital. As per RBI data, about $15 billion of committed or actual investments came into private financial entities in 2025 alone.

Wider access

Ghosh said that as the head of the group, his vision is to improve financial accessibility for a large number of people. He wants to stay true to his DNA, having founded Bandhan first as an NGO in 2001 and then a microlender in 2006, before converting to a bank.

“I’m not looking (for Bandhan) to compete with those serving corporates. That is not my objective,” said Ghosh.

Now, as the chair of Bandhan Financial Services Ltd — the investment management vehicle of the group — Ghosh divides his time between the new role, social work and in promoting entrepreneurship in West Bengal. Ghosh is the president of the Bengal Business Council, a group that wants to “imbibe the sense of entrepreneurship in the Bengali community.”

“The entrepreneurship mindset of Bengal must change. Till now you will see businesses in their second or third generation unable to scale and innovate,” said Ghosh.