MC EXCLUSIVE MC Exclusive | Governance, compliance & 82 years of legacy positioned RBL favourably: RS Kumar, MD & CEO, RBL Bank

RBL Bank

On Saturday evening, in a joint press statement, RBL Bank and Emirates NDB announced that the latter would infuse USD 3 billion of fresh capital into the RBL Bank. That translates to an infusion of Rs 26,850 crore into the Indian outfit, making it one of the largest investments in recent times outside of Dubai for Emirates NBD. It is also the largest foreign direct investment ever in an Indian bank.

Speaking exclusively to Moneycontrol, R Subramaniakumar, MD & CEO, RBL Bank says with this capital set to hit the bank in the next 5 – 8 months, his next target is to take RBL to a larger league in 3 – 5 years. With the deal translating to a multiple of 1.2x price to book, Kumar is confident that a right partner has stepped in to help explore RBL Bank new avenues of business, including wealth management. When asked whether voting rights capped by law at 26 percent was a contentious issue for Emirates, Kumar was quick to reply that foreign investor had a good grip over India’s regulatory directions and that was never the issue. Edited excerpts:

The deal which we have signed is much more than 1x price to book as we have signed it at Rs 280 per share. That translates to over 1.2x (price to book). We have very much kept up with the stance that we can't have the deal that is less than one plus multiples.

We can grow and scale our existing lines of business and multiply. That is a big opportunity. My (RBL’s) market share is 0.5 percent now. I have the ability to take it to 1%; this capital provides that opportunity to grow. Secondly, new line of business can be easily introduced and we can hitherto think about it. It opens us wealth management as a new line for us and even international business.

We are looking at the money which have received only for fresh deployment.

I am a firm believer of the governance and compliance culture. This is something which is engrained in the DNA of the bank and our people and this was the most important tipping point. The second factor is that we have demonstrated very clearly our ability to execute. You have seen in the last one and half years, that the products we have entered into are turning profitable and it clearly demonstrates our execution capacity.

Our vision is unwavering. It is not like we say something now and next quarter we say something else. We have been very transparently and upfront to make our position clear. Possibly that could have been a favourable factor too. Thirdly our brand has a very clear recall and relationship which we have built with customers is definitely an attractive point. Apart from that, India growth story is well known. RBL Bank is a franchise with strong governance, its roots and its 82 years of legacy.

That would be a nice way to call it.

That’s the plan we ourselves have. We want to take the bank into the larger league in the next 3 – 5 years. This (Emirates investment) provides us the ability to move that up the ladder. In fact, the capital infusion itself moves us up. With our progressive business capital, we will be able to do much better.

That was never a contention for ENBD. We made it extremely clear that the question of asking for relaxation or forbearance from the regulator is not our cup of tea and that we don't want to have any discussion on that. They understood this very clearly, because they are much stronger and they have been working with all other banks also. They know the regulatory directions.

The deal with Emirates is not selling RBL Bank. It is a question of making somebody to invest directly into the bank. Sale is different and, in a sale, I hand over this (RBL) to somebody else. I am not doing that; I’m expanding the base. For example, today I am operating in a single bedroom flat. Now, I have built the flat in a two bedroom, and in that process, this existing person is going to have another room. I had a very small kirana dukaan and I have made it into a multi-story mall.