The Reserve Bank of India (RBI) has assured investors that the RBL Bank is well capitalised and the financial position of the bank remains satisfactory. The statement from the central bank came after the share price fell nearly 25% on Monday morning early trade following the weekend action by the central bank.
At 11:33 am, the stock was trading at Rs 140.80 apiece on the BSE, down Rs 31.70 (18.38 per cent) while on NSE, it was at Rs 140.50, down Rs 32.40 (18.74 per cent).
The share price fell after a series of developments over the weekend where its long-term MD and CEO Vishwavir Ahuja was sent on leave with immediate effect and the Reserve Bank of India (RBI) sent a nominee to the bank’s board a day after his sudden departure. Rajeev Ahuja, executive director of RBL Bank, was named as interim MD and CEO.
The unanticipated RBI action, followed by the tanking of the share price of RBL Bank pushed the panic button amongst investors and customers of the private sector lender. In such a situation the Bank has released a statement assuring investors that they have little need to be concerned as the bank is properly capitalised and has a sound financial position.
In a press release dated December 27, 2020 and published on the official site of the Reserve Bank of India, the central stated: “There has been speculation relating to the RBL Bank Ltd. in certain quarters which appears to be arising from recent events surrounding the bank.
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.”
Further, 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.
As such, there is no need for depositors and other stakeholders to react to the speculative reports. The bank’s financial health remains stable”, read the statement duly signed by the Director (Communications)- Ajit Prasad.
It may be noted that in the wake of the sudden development, the trade unions had written to Nirmala Sitharaman, Union Finance Minister saying: “We are worried and concerned about the developments that are taking place in the affairs of RBL Bank Ltd, the Kolhapur-based private Bank.”
Speaking on the issue, Rajeev Ahuja, the executive director of RBL Bank who was named as interim MD and CEO, said that RBI had given him the assurance that the regulator was comfortable with the performance of the bank. He had added that the transition of the leadership at the bank was already underway, and the bank would see a much better third quarter.
