Shares of RBL Bank plunged today, after its CEO and mD Vishwavir Ahuja went on medical leave and RBI appointed an additional director over the weekend. RBI clarified that the RBL is well capitalized and financial position remains satisfactory. Photo : Bijoy Ghosh | Photo Credit: Bijoy Ghosh
Depositor nervousness fading, says Jaideep Iyer, Head of Finance, Strategy
Private sector lender RBL Bank, which went through a flux in late December, is now back on track and is comfortably placed on the deposit front.
“We are thankfully quite over the hump on that. Depositors have come back; deposits today are higher than December 31, 2021, and even higher than when we declared our third quarter results. We are sitting on some Rs. 14,000-15,000 crore of extra liquidity,” said Jaideep Iyer, Head of Finance, Strategy and Investor Relations.
The lender had reported a 2.58 per cent quarter on quarter drop in deposits to Rs. 73,637 crore as on December 31, 2021, with retail and small business deposits falling 11.3 per cent sequentially.
Many depositors had withdrawn funds following the Reserve Bank of India appointing an additional director on its board and its MD and CEO Vishwavir Ahuja going on leave. However, in the third quarter results call, the bank’s interim MD and CEO, Rajeev Ahuja, said there was a brief challenge to deposits in the last week of December, but it had since recovered and was higher than levels on December 24, 2021.
In an interaction with BusinessLine , Iyer attributed it to the nervousness of depositors, but said it has settled down since then. The appointment of a Managing Director and CEO, the process for which is currently underway, would bring further certainty.
Exiting bulk deposits
The pressure on deposits is no longer there but overall deposit growth will remain muted as the lender is working to let go off bulk deposits, he said. “We don’t want deposits beyond what growth is there in advances,” Iyer said, adding that advances will grow 10-15 per cent as the lender looks to rebalance its portfolio.
“We have also consciously chosen not to do unsecured retail loans other than credit cards and microfinance. These will be substituted with more mortgage/secured business loans, and more mid-market wholesale lending, all of which will give us a higher spread,” he said.
Iyer said the bank wants to move towards a strategy of lower volatility in earnings due to fluctuations in credit costs because of events like Covid, move to firm up the balance-sheet and focus on profitable growth by not necessarily changing headline growth.
The private sector lender had reported a 2.58 per cent quarter on quarter drop in deposits to Rs. 73,637 crore as on December 31, 2021, with retail deposits and deposits from small business customers falling by 11.3 per cent sequentially