Mumbai: Shares of RBL Bank After Reserve closed down 18% on Monday Bank of India (RBI) appointed an additional director on the board of the bank. reserve Bank of IndiaThe move was followed by the CEO of RBL Bank Vishwavir Ahuja He was going on medical leave six months before the end of his term.
RBL on Monday opened weak at Rs 155 after weekend developments and hit a 20% lower curve of Rs 132, before recovering marginally and ending at Rs 141 – 18% lower than Friday’s Rs 173. This prompted the RBI to issue a statement seeking to rein in speculations related to the bank “The bank is well capitalized and the financial position of the bank remains satisfactory. As per the half-yearly audited results as on September 30, 2021, the Bank has maintained a comfortable capital adequacy ratio of 16.3% and provision coverage ratio of 76.6%. Liquidity Coverage Ratio (LCR153% of the bank as on December 24, 2021, as against the regulatory requirement of 100%,” RBI said in its statement.
In a late evening release, RBL Bank said it has extended its partnership with Bajaj Finance for co-branded credit cards for another five years. This can be seen as a measure of confidence as it comes after an RBI director came along.
Addressing the media on Sunday, the bank’s interim CEO Rajiv Ahuja, who was till recently the executive director, said the RBI nominees on the board will help the bank improve its processes related to risk management and compliance. He also said that Vishwavir Ahuja’s one-year tenure means that a successor has to be identified and his going on leave has increased the need.
According to sources, the RBI nominee on the board, Yogesh Dayal, will assist the Bank in the process of identifying the successor. The bank has already started work on improving risk procedures. Last year, the bank brought in Deepak Kumar, who was earlier the chief general manager of SBI and served on the RBI’s committee to resolve the PMC bank crisis. “It is clarified that the appointment of Additional Directors in private banks is done under Section 36AB of the Banking Regulation Act, 1949, when it is felt that the Board requires close support in regulatory/supervisory matters. Thus, there is no need for depositors and other stakeholders to react to speculative reports. The financial position of the bank remains stable,” RBI said.
The quoted section allows the RBI to appoint a director in the interest of banking policy or in the public interest or in the interest of the banking company or its depositors. RBI had earlier appointed additional directors on the boards of Yes Bank, Jammu and Kashmir Bank, Ujjivan Small Finance Bank and Dhanlaxmi Bank.
Motilal Oswal said in a report, “The current developments have raised concerns about the bank’s ability to sustain the changes in its operational performance, while also raising concerns of similar action by the regulator on other medium-sized banks.” Where operational performance has been sub-optimal, we review our ratings and continue to monitor further developments and await further clarity in 3QFY22 results.
RBL on Monday opened weak at Rs 155 after weekend developments and hit a 20% lower curve of Rs 132, before recovering marginally and ending at Rs 141 – 18% lower than Friday’s Rs 173. This prompted the RBI to issue a statement seeking to rein in speculations related to the bank “The bank is well capitalized and the financial position of the bank remains satisfactory. As per the half-yearly audited results as on September 30, 2021, the Bank has maintained a comfortable capital adequacy ratio of 16.3% and provision coverage ratio of 76.6%. Liquidity Coverage Ratio (LCR153% of the bank as on December 24, 2021, as against the regulatory requirement of 100%,” RBI said in its statement.
In a late evening release, RBL Bank said it has extended its partnership with Bajaj Finance for co-branded credit cards for another five years. This can be seen as a measure of confidence as it comes after an RBI director came along.
Addressing the media on Sunday, the bank’s interim CEO Rajiv Ahuja, who was till recently the executive director, said the RBI nominees on the board will help the bank improve its processes related to risk management and compliance. He also said that Vishwavir Ahuja’s one-year tenure means that a successor has to be identified and his going on leave has increased the need.
According to sources, the RBI nominee on the board, Yogesh Dayal, will assist the Bank in the process of identifying the successor. The bank has already started work on improving risk procedures. Last year, the bank brought in Deepak Kumar, who was earlier the chief general manager of SBI and served on the RBI’s committee to resolve the PMC bank crisis. “It is clarified that the appointment of Additional Directors in private banks is done under Section 36AB of the Banking Regulation Act, 1949, when it is felt that the Board requires close support in regulatory/supervisory matters. Thus, there is no need for depositors and other stakeholders to react to speculative reports. The financial position of the bank remains stable,” RBI said.
The quoted section allows the RBI to appoint a director in the interest of banking policy or in the public interest or in the interest of the banking company or its depositors. RBI had earlier appointed additional directors on the boards of Yes Bank, Jammu and Kashmir Bank, Ujjivan Small Finance Bank and Dhanlaxmi Bank.
Motilal Oswal said in a report, “The current developments have raised concerns about the bank’s ability to sustain the changes in its operational performance, while also raising concerns of similar action by the regulator on other medium-sized banks.” Where operational performance has been sub-optimal, we review our ratings and continue to monitor further developments and await further clarity in 3QFY22 results.
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