RBI says RBL Bank’s financial health stable; stock off day’s low

RBI says RBL Bank’s financial health stable; stock off day’s low


NEW DELHI: RBI bank shares NSE 3.37% hit the 20 percent lower circuit limit on Monday trade after sudden changes in the higher management in the board of the bank.

Bank has appointed Rajiv Ahuja as an interim MD and CEO OF THE RBL bank and Yogesh Yadav central manager of the central bank as additional directors on the board of the bank. After accepting the managing director and CEO Vishwavir Ahuja’s request to proceed with ‘medical leave’.


These changes in the higher management have shocked depositors and investors of the bank because such steps are taken by the RBI to deal with weak cases like Yes bank, Dhan Laxmi bank, and Ujjawan bank in the past.

Appointment of directors to the board of the bank is taking place under section 36AB of the banking regulation act 1949, to provide support and supervise the board of the bank, started by RBI.



 RBI says RBL Bank’s financial health stable; stock off day’s low


Analysts say that fresh development is a surprise for many because 62 years old Ahuja is left with a term of six months to complete as director. 

Lender insisted that changes in the board are not the reflection of fundamentals, says business and bank. Because the bank position has improved since the second quarter of this financial year. 


As per the audited results, the bank maintained a capital adequacy ratio of 16.33%, a provision coverage ratio of 76.6%and a liquidity coverage ratio of 153%. 

RBI shows its faith in the fundamentals and management of banks and clarifies that the financial health of bank NSE 1.95 % is stable. And the private-sector lender is well-capitalized and the bank’s financial position is satisfactory. 

Foreign brokerage CLSA calls the RBI move surprising and adds that move will lead to some uncertainty in the short term. 


RBL has witnessed asset quality stress in recent years led by the non-performing loan formation in the corporate portfolios. 

Consequently, the bank has also reported a slight decline in its loan book over the past two years and the return of assets in FY 20-21 halved over the previous years, Motilal Oswal says in the note. 

Changes in the top management are to bring down net NPA to below 2% from 2.1 % by improving PCR and achieving a return on assets (ROA) of 1% by Q4.

RBI intervention, that said we got comfort by appointing Rajeev Ahuja as interim MD and CEO health liquidity buffers capital ratio and management strategic intent to change the portfolio mix towards secured assets. 


Nirmal bang instituted equities say that RBI-appointed directors and significant assets quality issues have generally gone hand in hand.

Emkay Global Financial Services Ltd. says ‘We believe to comfort investors, more explanation is required to justify the sudden exit of Vishwavir Ahuja nearly six months before the end of the term’. 

There is no change in the business and financial outlook of the bank. The answer concerning the reason for Vishwavir Ahuja’s immediate exit and appointment of RBI’s new directors remains unanswered and unsatisfactory.

The fresh instability in the bank’s higher management will negatively impact bank stock prices.