Bandhan Bank Limited has received a GST demand order worth ₹2.99 crores from Gujarat tax authorities, the bank disclosed in a regulatory filing on December 26, 2025. The Deputy Commissioner, Range-2, Gujarat, issued the order under Section 73 of the Central Goods and Services Tax Act, 2017, alleging various GST-related violations.

Details of the GST Demand Order

The demand order encompasses multiple components including tax, interest, and penalty charges. The breakdown reveals the financial impact across different categories:

Nature of Alleged Violations

The order addresses several GST compliance issues pertaining to the financial year 2021-22. The key allegations include:

• Excess or ineligible Input Tax Credit availed and utilized by the bank
• Non-payment of GST on certain income categories
• Other related GST compliance matters

The bank received the demand order on December 26, 2025, and has disclosed the matter in compliance with SEBI listing regulations.

Bank's Response and Impact Assessment

Bandhan Bank has clarified that the GST demand order will not materially impact its financial position or operational activities. The bank emphasized that despite the substantial demand amount, its overall business operations remain unaffected.

The bank is currently examining the merits of the case and plans to initiate appropriate legal remedies. This includes the possibility of filing an appeal before higher tax authorities to contest the demand order.

Regulatory Compliance

The disclosure was made pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The bank has provided comprehensive details as required under the regulatory framework, ensuring transparency with stakeholders and investors regarding this development.

Bandhan Bank has successfully completed its major asset cleanup initiative by selling non-performing assets (NPAs) and written-off portfolios worth Rs 6,872.36 crore to Asset Reconstruction Companies (ARCs) for a total consideration of Rs 901.72 crore. The transaction, which was approved by the bank's board in November, represents a significant milestone in the bank's efforts to strengthen its balance sheet and improve asset quality.

Transaction Details

The asset sale was executed through two separate transactions with different ARCs, following the bank's strategic approach to portfolio diversification:

NPA Portfolio Sale to ARCIL

The bank successfully sold its unsecured NPA portfolio with more than 180 Days Past Due to Asset Reconstruction Companies (India) Limited (ARCIL) through the Swiss Challenge Method. The transaction details include:

Written-off Portfolio Sale to Phoenix ARC

The second component involved the sale of the bank's unsecured written-off loan portfolio to Phoenix ARC Private Limited through an auction process:

Strategic Impact on Financial Position

The completion of this asset sale marks a crucial step in Bandhan Bank's balance sheet optimization strategy. The transaction encompasses assets from the bank's Emerging Entrepreneurs Business (EEB), including group loans and small business agri loans, as well as the Aspiring Business Group (ABG).

The bank's retention of significant portions of Security Receipts in both transactions demonstrates its continued interest in potential recoveries while transferring the primary collection responsibility to specialized ARCs. This approach allows the bank to clean up its books while maintaining upside potential from future recoveries.

Regulatory Compliance and Market Impact

This transaction aligns with regulatory expectations for banks to actively manage their non-performing assets and maintain healthy asset quality ratios. The successful completion of the sale process, involving both Swiss Challenge and auction methods, showcases the bank's systematic approach to asset resolution.

The move is expected to positively impact the bank's key financial metrics, including gross NPA ratios and return on assets, while freeing up capital for productive lending activities. Market observers will closely monitor the bank's upcoming quarterly results to assess the full impact of this strategic initiative on its financial performance.