After the Reserve Bank of India implemented moratorium for Yes Bank on March 6, stocks of Yes Bank and RBL Bank saw heavy selling pressure.
RBL Bank has crashed 46 percent since March 6, but gained some strength today, rising 7 percent intraday after the management said it is confident about its deposit levels, liquidity positions, and guidance.
"After moratorium on Yes Bank and problems with certain private banks, there was some problem related to deposits but we have been maintaining surplus liquidity positions. We previously announced that we have higher level of LCR, other line of credits, hence we always in a comfortable position," Vishwavir Ahuja, MD & CEO at RBL Bank told CNBC-TV18.
On the institutional front, there was some pulling out money which was across all banks, but RBI reached out to them saying they should not do that, he said.
RBI governor Shaktikanta Das said on March 16 there is sufficient liquidity in the financial markets and the RBI has been watching the situation closely.
As of yesterday, Ahuja said the trend seems to have kind of reversed in terms of deposits and the bank has not seen any withdrawal on Monday. "Retail deposits base has been well, net inflow remains significant in retail and institutional desks. As we are extremely comfortable on the liquidity front, the withdrawal happened recently was not material for us."
"Some institutional players wanted to play safe and as a result, they moved some money for one or two days but they are coming back again. In effect, we are net gainer, six very marquee names moved their corporate cash management to us and in few other cases, where fintech involved, accounts moved to us," he said.
Ahuja further said, "Those banks which have the capability in terms of all segments, we are one of them now. I am trying to dispel all those concerns very directly."
On top of that, he confidently said all financial parameters are strong, whether it is capital adequacy ratio, asset quality, etc. "In fact, all growth engines have been running smoothly."
Every bank has state governments' deposits. He said RBL Bank has around 6-7 percent of total deposits from state governments, which is not significant but some states including Maharashtra, West Bengal, etc are happy with the bank.
It is a global situation, the bank is not seeing anything immediate in terms of impact, he added.
Globally there has been market rout due to wide-spreading coronavirus outside of China. Hence to support the growth engine, several central banks including the US Federal Reserve, Bank of Canada, Reserve Bank of Australia, etc announced interest rate cut as well as fiscal stimulus. In fact, they don't want any impact on their financial system.
The Reserve Bank of India approached several banks to provide financial assistance to Yes Bank. "We have also been approached to invest in Yes Bank, but we felt that let the opportunity pass," Ahuja said.
Private banks and financial institutions HDFC, ICICI Bank, Kotak Mahindra Bank, Axis Bank, Bandhan Bank, IDFC First Bank and Federal Bank invested Rs 3,950 crore in Yes Bank, while the leader State Bank of India invested Rs 6,050 crore. Hence, Rs 10,000 crore of liquidity support to the cash-starved Yes Bank which clearly reflected in the stock price that gained more than 150 percent in the last three consecutive sessions.
On the guidance front, RBL Bank's Ahuja said asset quality will remain stable and whatever the bank guided for Q4, it continued to standby.
"Slippages have been coming down, corporate slippages are within the guidance levels. We are confident to balance the tail-end of problems. In fact we are hopeful to embark on business as usual in FY21. We are will touch 3 million cards by end of this fiscal, which is one third the size of SBI Cards. Microlending business was good in February and also good in March so far. Retail business is tacking well," he explained.
On the margin front, Ahuja said actually margins are looking good now or maybe better than last quarter.