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RBL Bank hits 52-week low after reports of Rs 300 cr loan write-off within 7 months of sanctioning

The key reason for RBI's sudden intervention in private lender RBL Bank was a Rs 300-crore loan that was written off within seven months of being sanctioned, a report said.

December 30, 2021 / 11:34 AM IST
 
 
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Shares of RBL Bank hit a fresh 52-week low on December 30, falling over 8 percent. The stock has been in focus after the bank wrote-off loans worth Rs 300 crore within seven months of the loans being sanctioned.

At 10:59 hours, the stock was trading at Rs 132.75, down Rs 11.55, or 8.00 percent. It touched a 52-week low of Rs 130.50.

The key reason for Reserve Bank of India's sudden intervention in private lender RBL Bank was a Rs 300-crore loan that was written off within seven months of being sanctioned, according to a report by newspaper publication Mint.

In other news, RBL Bank on December 30 informed that the RBI has approved the appointment of Rajeev Ahuja as Interim Managing Director and CEO of the bank for a period of three months with effect from December 25, 2021 or till the appointment of a regular MD and CEO, whichever is earlier.

Also Read: RBI says RBL Bank well capitalised, financial position satisfactory

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RBL Bank’s financial health is stable and it is well-capitalised, the 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 stock price has been on additional pressure after report by Edelweiss Securities said that the private sector lender may get excluded from the Nifty Bank index in the National Stock Exchange's upcoming review due in March 2022.

"The index change is expected to take place after the recent developments at the bank," Edelweiss said.

Domestic research and broking firm Motilal Oswal in its report said that the current developments have raised concerns about the bank’s ability to sustain a turnaround in its operating performance, while at the same time raising worries of similar actions by the regulator on other mid-sized banks, where the operating performance has been sub-optimal.

We thus put our rating under review and remain watchful of further developments and await further clarity in the 3QFY22 result.

Meanwhile, foreign brokerage CLSA said the next 6 months will be key in validating the management’s reiteration of its performance. It has maintained an "outperform" rating and cut target to Rs 200 from Rs 230 per share.

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ICICI Securities has downgraded the stock to "sell", and lowered its target price to Rs 131 from Rs 181 on the back of looming uncertainty. This interim adverse development can drag valuation to as low as 0.55x FY23 book, the brokerage said.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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first published: Dec 30, 2021 11:34 am
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