No reasons for RBL Bank depositors to worry, clarifies RBI

Surprise appointments made last week, including the addition of an RBI Chief General Manager to the bank’s board, had triggered speculation

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RBL Bank is well capitalised and its financial position remains satisfactory, said the Reserve Bank of India. (Representational image)

Amid rising speculation and investor concern on the financial health of RBL Bank (formerly Ratnakar Bank Ltd), the Reserve Bank of India (RBI) issued a statement on Monday, saying the private sector bank is well capitalised. The financial position of the bank remains satisfactory, it said, adding that there is no cause for concern for the bank’s depositors and other stakeholders.

“There has been speculation relating to the RBL Bank Ltd in certain quarters which appears to be arising from recent events surrounding the bank,” said the RBI statement. “The Reserve Bank would like to state that the bank is well capitalised and the financial position of the bank remains satisfactory.”

“As per half yearly audited results as on September 30, 2021, the bank has maintained a comfortable Capital Adequacy Ratio of 16.33 per cent and Provision Coverage Ratio of 76.6 per cent. The Liquidity Coverage Ratio (LCR) of the bank is 153 per cent as on December 24, 2021 as against regulatory requirement of 100 per cent,” it added.

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“As such, there is no need for depositors and other stakeholders to react to the speculative reports. The bank’s financial health remains stable,” said the central bank.

What triggered the speculation

Last week, the Kolhapur, Maharashtra-based private sector bank, which is listed on the Bombay Stock Exchange (BSE), made some surprise appointments to its board and top management. In a BSE submission, it said the central bank had appointed Yogesh Dayal, the RBI’s Chief General Manager, to RBL’s board for two years.

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Further, Rajeev Ahuja was promoted to Interim Managing Director and Chief Executive Officer of the bank, succeeding Vishwavir Ahuja, who went on medical leave.

The sudden changes triggered speculation, with media reports wondering if the bank was in trouble. This in turn spooked the stock markets, and RBL Bank’s shares plunged 25% on Monday morning, marking the biggest decline since its 2016 listing.

‘Sound fundamentals’

RBL Bank said in a BSE release that its fundamentals are sound. “We would like to reiterate that these developments are not in any manner a reflection on the fundamentals of the bank. As we have been communicating to all of you, the business momentum and financial performance trajectory have been improving since the second quarter of this financial year as we recovered from the effects of the pandemic.”

“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,” it said.

On Monday, the RBI reiterated that the appointments need not cause alarm. “It is clarified that appointment of Additional Director/s 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,” it said.

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