What’s next for RBL Bank? – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/money-and-banking/whats-next-for-rbl-bank/article38043997.ece?homepage=true

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RBL Bank’s stock will be tested on Monday in the wake of two developments — RBI appointing an additional director on the Bank’s board and its MD & CEO proceeding on leave

RBL Bank’s stock will be tested on Monday in the wake of two developments — the Reserve Bank of India appointing an additional director on the Bank’s board and its MD & CEO proceeding on leave.

Last Friday, RBL Bank’s stock closed at ₹172.50 a piece, down 3.06 per cent (or by ₹5.45) over the previous close.

As on Friday, the stock’s 52-week high and low was ₹274 and ₹ 155.65, respectively.

In the past, the central bank had appointed additional directors on the board of Jammu & Kashmir Bank, YES Bank, Dhanlaxmi Bank, and Ujjivan Small Finance Bank.

The central bank invoked Section 36 AB (power of RBI to appoint additional directors) contained in Part 2A (Control over Management) of the Banking Regulation Act, 1949, to appoint Yogesh K Dayal, Chief General Manager, RBI, as additional director on RBL Bank’s Board for two years.

As per Section 36 AB, if the Reserve Bank is of opinion that in the interest of banking policy or in the public interest or in the interests of the banking company or its depositors it is necessary so to do, it may, from time to time by order in writing, appoint, with effect from such date as may be specified in the order, one or more persons to hold office as additional directors of the banking company.

Interim MD appointed

RBL Bank’s board, at its December 25 meeting, accepted MD & CEO Vishwavir Ahuja’s request to proceed on leave with immediate effect. It immediately appointed Rajeev Ahuja (hitherto Executive Director) as interim MD & CEO, subject to the regulatory and other approvals.

The gross non-performing assets of the bank (originally established as The Ratnakar Bank Ltd in 1943 in Kolhapur) rose 106 basis points to 5.40 per cent of gross advances as at September-end 2021 against 4.34 per cent as at March-end 2021.

A break-up of the bank’s retail loan portfolio shows that exposure to the unsecured credit cards segment is very high, accounting for about 40.55 per cent of its retail loan portfolio of ₹30,784 crore as at September-end 2021.

After credit cards, the lender has the highest exposure to business loans (where the eligibility criteria is that an applicant must own either residence or office in his name or jointly with family members or resides in a residence owned by an immediate family member) at about 30 per cent and to micro-banking at about 16 per cent.

Housing loans are at just 5 per cent of the total retail portfolio.

Retail loans de-grew 4 per cent year-on-year (yoy) to ₹30,784 crore as at September-end 2021. Wholesale loans grew 5 per cent y-o-y to ₹25,224 crore.

In the current financial year, the bank reported a net profit of ₹ 31 crore in the second quarter against a net loss of ₹ 459 crore in the first quarter.

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