RBL Bank Fiasco: Over the weekend, leading private lender in India RBL bank has gone through a rollercoaster of events. In a surprise move, the Reserve Bank of India in a regulatory filing said that the board of the bank has accepted “the request of Vishwavir Ahuja to proceed on leave with immediate effect”. RBL Bank’s Vishawvir Ahuja had stepped down as MD & CEO of the bank last weekend and the effect was felt on Monday, when the stock of the bank slumped 20 per cent during intra day trade. This was a 52 week low at Rs 138, as per media reports.
Here is a look at everything that happened at the RBL Bank over the weekend:
Vishwavir Ahuja Steps Down as CEO of RBL Bank
RBL Bank’s Vishawvir Ahuja stepped down as MD & CEO of the bank, and the bank appointed Rajeev Ahuja as as the interim Managing Director and Chief Executive Officer of the bank with immediate effect. The Reserve Bank of India has also appointed its Chief General Manager Yogesh K Dayal as an additional director on the board of RBL Bank on Saturday.
RBL Bank in a regulatory filing said that the board of the bank has accepted “the request of Vishwavir Ahuja to proceed on leave with immediate effect”. The board in a meeting held on Saturday appointed Rajeev Ahuja (currently the Executive Director) as interim Managing Director & Chief Executive Officer of the bank with immediate effect, subject to the regulatory and other approvals, the bank said.
Interim CEO Allays Fears on Issue with Asset Quality
Rajeev Ahuja on Sunday sought to allay concerns around the health of the private sector lender, stressing that the events over the weekend are not linked to quality of advances or asset quality. He asserted that the bank will post better profits in December quarter than the preceding September quarter. He said the bank will stick to all the targets spelled out at the earning call in September, but conceded that microfinance lending is an area which requires more attention.
Rajeev claimed that the board of the bank had already chosen him as the successor to Vishwavir, and RBI-appointed additional director Yogesh Dayal also voted for his appointment as MD and CEO at a meeting held over the weekend. The central bank is fully behind the bank and its strategy, he added. Vishwavir had to go on leave on medical grounds, Rajeev said.
RBL Bank Stock at All-Time Low Despite Assurances
The shares of RBL Bank fell 20 per cent at Rs 138 after the fiasco during Monday’s intra-day trade. The shares of the bank fell despite attempts to assure people that the bank’s operations were fine. However, depositors continued to withdraw their money from the bank resulting in the fall of shares. A total of 1.9 million equity shares had been exchanged on the NSE and BSE. Previously, the bank’s shares had dipped to Rs 101 in April 2020.
What the RBI Said
In a notification issued on Monday, the RBI dismissed all speculation regarding RBL Bank and said that the lender was well-capitalised.
“There has been speculation relating to the RBL Bank Ltd. in certain quarters
which appears to be arising from recent events surrounding the bank.
The Reserve Bank would like to state that the bank is well capitalised and the
financial position of the bank remains satisfactory. As per half yearly audited results as on September 30, 2021, the bank has maintained a comfortable Capital Adequacy Ratio of 16.33 per cent and Provision Coverage Ratio of 76.6 per cent. The Liquidity Coverage Ratio (LCR) of the bank is 153 per cent as on December 24, 2021 as against regulatory requirement of 100 per cent. Further, it is clarified that appointment of Additional Director/s in private banks is undertaken under Section 36AB of the Banking Regulation Act, 1949 as and when it is felt that the board needs closer support in regulatory / supervisory matters,” said the central bank in its statement.
“As such, there is no need for depositors and other stakeholders to react to the
speculative reports. The bank’s financial health remains stable,” it added.
What’s Next For RBL Bank?
Analysts at Emkay Global Financial Services advised to hold asset at RBL Bank. “We believe, in order to comfort investors, more explanation will be required from management to justify the sudden exit of Mr Vishwavir Ahuja nearly six months before his term ends (Jun’22) and the RBI’s intervention (typically seen in weak banks like Ujjivan, Dhanlaxmi, LVB, J&K Bank). We believe the story will unfold in due course. That said, we draw some comfort from the appointment of Mr Rajeev Ahuja (part of the turnaround journey) as interim MD & CEO, healthy liquidity buffers/capital ratios (Tier I at 15.5%) and management’s strategic intent to change the portfolio mix toward secured assets,” said a note.
(With PTI inputs)
Read all the Latest Business News here
Comments
0 comment