The RBL Bank stock tanked on Monday as developments over the last weekend had a ripple effect even as the Reserve Bank of India stated that the Bank is well capitalised and that its financial position remains satisfactory.
The Bank’s stock price slumped 18.32 per cent (or by ₹31.60) to close at ₹140.90 apiece against the previous close of ₹172.50. The stock hit a low of ₹132.35 and a high of ₹155.25. The opening price was also the intraday high price.
Two developments cast a shadow over the Bank’s stock. The RBI last week appointed an additional director — RBI Chief General Manager Yogesh K Dayal — on the RBL Bank’s board. Further, the bank’s MD and CEO, Vishwavir Ahuja, proceeded on medical leave. These developments were interpreted by market players to mean all is not well with the Bank.
Referring to speculation relating to RBL Bank in certain quarters, the RBI on Monday said there is no need for depositors and other stakeholders to react to speculative reports. The Bank’s financial health remains stable, it said.
Comfortable CAR
Calling attention to RBL Bank’s half-yearly audited results as on September 30, 2021, the RBI said the bank has maintained a comfortable Capital Adequacy Ratio of 16.33 per cent and a Provision Coverage Ratio of 76.6 per cent. The Liquidity Coverage Ratio (LCR) is 153 per cent as on December 24, 2021 against regulatory requirement of 100 per cent.
Further, the central bank clarified that the 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 support in regulatory/supervisory matters.
In a media call on December 26, interim MD and CEO Rajeev Ahuja said RBL Bank and its management team had the full support of the RBI. He emphasised that the Bank had excess liquidity of about ₹15,000 crore, refinance from the RBI and bank lines to manage any volatility in deposits.
Full support of RBI
Rajeev Ahuja underscored that these developments are not on account of any concern on advances, asset quality and deposit levels. “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 and CEO role which should allay concerns on the strategy and smooth functioning of the Bank as well as the strength of the overall franchise,” he told the media.
Meanwhile, CH Venkatachalam, General Secretary, All India Bank Employees’ Association, has sought Finance Minister Nirmala Sitharaman’s immediate intervention in the interest of RBL Bank depositors and consider taking necessary steps, including merger of the Bank with a Public Sector Bank.
The market was also abuzz with reports that ace investor Rakesh Jhunjhunwala and D-Mart founder RK Damani had approached the RBI to buy 10 per cent stake in the Bank. However, this could not be confirmed.
