Mumbai-based private sector lender RBL Bank on December 26 said the bank and its top management has the full support of the Reserve Bank of India (RBI) and asset quality issues are addressed.
"The (recent) developments are not on account of asset quality, advances issues. The bank has the full support of the RBI," said Rajeev Ahuja, Managing Director & CEO of RBL Bank (Interim), in a conference call with the media.
Story continues below Advertisement
On December 25, the RBI appointed Yogesh Dayal, the chief general manager in-charge of department of communication, as an additional director on the board of the bank.
Later in the day, the bank communicated to the exchanges that RBL Bank’s long-term MD and CEO Vishwavir Ahuja, a veteran banker, has gone on leave with immediate effect.
Also Read: Rakesh Jhunjhunwala, RK Damani approach RBI with request to buy 10% stake in RBL Bank
Subsequently, Executive Director Rajeev Ahuja was named the interim MD and CEO of the bank subject to regulatory approvals.
“Frankly, in terms of change of leadership, it (RBI appointing additional director on the Board) has nothing to do with the developments within the bank. All business fundamentals are intact,” Ahuja said.
Ahuja said there are 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.
Management prepared
“We are a very well developed management team. Everybody has their job cut out,” Ahuja added.
The bank is grateful for the contribution of outgoing CEO Vishwavir Ahuja for the growth of the bank in initial phase, Rajeev Ahuja said, adding that the decision of Ahuja to go on the leave is a personal decision. “I don’t want to speculate on RBI’s objective,” Ahuja said.
The bank is well capitalised and doesn’t have any immediate capital requirements, Ahuja said, adding the bank will continue with its investments. The bank doesn't need capital for the next eight to 12 months, Ahuja added.
"We are going to accelerate many of our investments in technology," said Ahuja.
Earlier, to calm investors, RBL Bank had informed the exchanges that business is as usual at the bank. RBL also told the stock exchanges that its business and financial trajectory continues to be on improving trend.“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 leverage ratio of 10 percent, for the quarter ended September 30, 2021,” the bank said.
Story continues below Advertisement
Also Read: RBL Bank Press Conference Highlights
Responding to a question on challenge ahead on customer faith in the bank, Ahuja said the bank is prepared to face the challenges.
“We have to deal with what we have,” said Ahuja. “RBI is standing behind us and supporting us,” Ahuja said.
Story continues below Advertisement
All the fundamentals are in place, reiterated Ahuja.
Ahuja also said that the microfinance segment has faced challenges during the COVID-19 and may continue to face the same.
“We recognise that microfinance sector is likely to face challenges. We have to be careful. We have been diversifying a lot. This segment has vulnerability but we will cautiously start growing it, Ahuja said.
Ahuja said he isn't aware of any RBI enquiries related to any governance issues in the bank.
"Clearly they (RBI) make an appointment in the best interest of the banking system. They are clearly of the view that the bank is making progress financially. But I don't think they have any questions around the long-term sustainability of the bank," Ahuja said.
Asked whether the RBL Board requested Vishwavir Ahuja to reconsider his decision to go on leave well ahead of his tenure, Ahuja said he can only speculate what transpired between the Board and the outgoing CEO.
Also Read: RBI action against RBL Bank | What we know so far
“I’m sure the board would have had a lot of active discussions with him. I’m sure conversations would have happened. Beyond that I will not make any comments,” Ahuja said.
Later, in a press statement, RBL Bank said these developments are not on account of any concern on advances, asset quality and deposits level of the Bank.
"We want to allay any concerns any of you may have in this regard. The Bank has the full support of the RBI. The Board has elevated an existing member of the management team to the interim MD & CEO role which should allay concerns on the strategy and smooth functioning of the Bank as well as the strength of the overall franchise," the bank said.
Further, the bank has capital adequacy of 16.3 percent, which will be in a similar range this quarter, the bank said.
"Liquidity Coverage ratios have been well above regulatory requirements – it was 155 percent for the September quarter. On asset quality, our slippages peaked in Q2 and will be improving this quarter and next as we had guided previously. The NPA position of the Bank will also be on an improving trend," the bank said.
Also, the lender said it has been upfront and transparent on any challenges that it faced in our various business segments in the past. "To reiterate there is no change from what we have been communicating all along. On growth, traction on advances is picking up while we continue to keep improving granularity on both advances and deposits," the bank said.
Reacting to the developments, Gaja Capital, one of the investors in the RBL Bank, said it supports the new leadership at RBL Bank.
"Rajeev Ahuja is one of the original and principal architects of the new RBL Bank strategy since 2010 having been part of the journey since day one. We are confident that under his leadership, RBL will continue to progress towards its objective of creating India’s leading digitally enabled banking franchise,” said Gopal Jain, Managing Partner at Gaja Capital.
Dinesh Unnikrishnan is Deputy Editor at Moneycontrol. Dinesh heads the Banking and Finance Bureau at Moneycontrol. He also writes a weekly column, Banking Central, every Monday.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
