RBL Bank’s financial health is stable and it is well-capitalised, the Reserve Bank of India (RBI) said on December 27, two days after its sudden move to name Yogesh Dayal as an additional director triggered concerns about private lender’s stability.
"The Reserve Bank would like to state that the bank is well capitalised and the financial position of the bank remains satisfactory," the central bank said in a statement after the Christmas Day events and subsequent media reports saw the RBL stock take a pounding.
"As such, there is no need for depositors and other stakeholders to react to speculative reports. The bank’s financial health remains stable," it said.
On December 25, the central bank appointed Dayal, the chief general manager in charge of the department of communication, as an additional director on RBL’s board.
Later in the day, the Mumbai-headquartered bank told exchanges that its managing director and CEO Vishwavir Ahuja, a veteran banker, had gone on leave with immediate effect.
Executive Director Rajeev Ahuja was named the interim MD and CEO of the bank.
As per half-yearly audited results, as on September 30, 2021, RBL maintained a comfortable capital adequacy ratio of 16.33 percent and provision coverage ratio of 76.6 percent, the central bank said.
The Liquidity Coverage Ratio (LCR) of the bank was 153 percent as on December 24, 2021, as against the regulatory requirement of 100 percent, the RBI added.
LCR is the share of high-quality liquid assets to be set aside to by financial institutions to meet short-term obligations.
The appointment of additional directors 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, the RBI said.
RBL Bank on December 26 said the bank and its top management had the full support of RBI and asset quality issues were addressed.
"The (recent) developments are not on account of asset quality, advances issues. The bank has the full support of the RBI," Rajeev Ahuja said in a conference call with the media on December 26.
He said there were some learnings from the recent developments and adverse market conditions.
“There are some deep learnings. Some of the mistakes we made…clearly one of the biggest lessons is to have more granularity in deposits and balance between secured, unsecured is essential (Sic),” Ahuja said.“We are a very well-developed management team. Everybody has their job cut out.”
The bank was grateful for the contribution of outgoing CEO Vishwavir Ahuja in the growth of the bank in the initial phase, Rajeev Ahuja said. His decision to go on leave was personal, he said, adding, “I don’t want to speculate on RBI’s objective.”
The bank was well-capitalised and didn’t have any immediate capital requirements, Ahuja said. The bank won’t need capital for the next eight to 12 months and continue with its investments.
Earlier to calm investors, RBL Bank informed the exchanges that its business and financial trajectory continued to improve.“The financials of the bank remain robust with a healthy capital adequacy of 16.3 percent, high levels of liquidity as reflected through liquidity coverage ratio of 155 percent, stable net NPA of 2.14 percent, credit deposit ratio of 74.1 percent and a leverage ratio of 10 percent, for the quarter ended September 30, 2021,” the bank said.