RBL Bank Aims To Break Into Big League With Emirates NBD Deal, Says CEO

RBL Bank Ltd. wants to break into the big league of India's financial sector after securing a $3 billion investment from Emirates NBD.

"We do not want to be part of mid-sized banks," R Subramaniakumar, managing director and cheif executive officer, told NDTV Profit on Monday. "We have multiple options to expand out balance sheet... We have a great opportunity to break into the larger league."

Dubai's second largest bank will buy a 60% stake in the Indian private lender through a preferential allotment.

Subramaniakumar said the deal reflects confidence not just in the growth story of RBL Bank, but also of India and its booming financial sector. "It is a great endorsement of the brand and the team. It is the confidence on the board."

He also explained that RBL Bank had two options: either go for an 'in tranche' deal where money will come in multiple portions or a frontloaded investment that provides a free runway for growth. The lender chose the latter.

The RBL Bank-Emirates NBD deal also benefits from the current trend of regulations that promotes growth, he said. India allows 74% foreign investment in private banks, but limits shareholdings of any single foreign institution to 15% unless the regulator has approved.

The bank will hold an extraordinary general meeting of shareholders on Nov. 12 to seek their approval for the deal. The transaction is expected to be completed in the following five-six months, the CEO said.

The merger requires approval from the Reserve Bank of India, Securities Exchange Board of India, and Competition Commission of India.

Post the investment, RBL Bank's net worth will increase to Rs 42,000 crore. As per the agreement, post fund infusion, the current management will continue at the top level.