RBL Bank fiasco: CEO resigns, shares tank 20 per cent; What’s next for RBL Bank?

RBL Bank said in a regulatory filing that the bank’s board has accepted the “request of Vishwavir Ahuja to go on leave with immediate effect”. In a meeting held on Saturday, the board appointed Rajiv Ahuja (currently executive director) as interim managing director. The directors and chief executive officers of the bank, with immediate effect, subject to regulatory and other approvals, said the bank.

Interim CEO allays apprehensions over asset quality issue

Rajiv Ahuja on Sunday sought to allay concerns about the health of the private sector lender, emphasizing that the developments over the weekend are not linked to the quality of advances or the quality of assets. He said the bank would make better profits in the December quarter as compared to the preceding September quarter. He said the bank would stick to all the targets set out in the earnings call in September, but acknowledged that microfinance lending is an area that needs more attention.

Rajiv claimed that the bank’s board had already chosen him as Vishwavir’s successor, and that RBI-appointed additional director Yogesh Dayal also voted for his appointment as MD and CEO in a meeting held over the weekend. He said that the central bank is completely behind the bank and its strategy. Rajiv said that Vishwavir had to go on leave on medical grounds.

Despite assurances, RBL Bank stock at all-time low

Shares of RBL Bank fell 20 per cent to Rs 138 after a glitch during Monday’s intra-day trade. Despite efforts to reassure people that the bank’s operations were fine, the bank’s shares fell. However, the depositors continued to withdraw their money from the bank resulting in a fall in the shares. A total of 1.9 million equity shares were exchanged on NSE and BSE. Earlier in April 2020, the bank’s shares had fallen to Rs 101.

What’s next for RBL Bank?

Analysts at Emkay Global Financial Services give a buy call to RBL Bank. “We believe that in order to give comfort to the investors, the sudden exit of Mr. Vishwavir Ahuja’s tenure ends (June 22) about six months before and RBI’s intervention (usually seen in weak banks like Ujjivan) is justified. , Dhanalakshmi, LVB, J&K Bank. We are confident that the story will unfold in due course. That said, we will take Mr. Rajeev Ahuja (of the turnaround journey) as interim MD & CEO. share), with healthy liquidity buffer/capital ratio (Tier I 15.5%) and strategic intent of the management to transform the portfolio mix into safe assets,” a note said.