RBL Bank: RBI Says Lender's Financial Health Is Stable

The Reserve Bank of India has issued a rare statement saying the financial health of RBL Bank Ltd. is stable, in an attempt to quell speculation arising out of recent events at the lender.

Over the weekend, the bank disclosed that the regulator has appointed an additional director on its board—a step it takes when a bank needs enhanced supervision. Alongside, the bank disclosed that long-time Chief Executive Officer Vishwavir Ahuja is proceeding on medical leave immediately and Executive Director Rajeev Ahuja will take over as interim CEO.

Together, the events led to speculation over the health of the lender, whose shares plunged as much as 25% over the course of the day.

In its statement, the RBI said the bank is well capitalised and its financial position remains "satisfactory".

"As per half-yearly audited results as on Sept. 30, 2021, the bank has maintained a comfortable capital adequacy ratio of 16.33% and provision coverage ratio of 76.6%. The liquidity coverage ratio of the bank is 153% as on Dec. 24, 2021 as against the regulatory requirement of 100%," the RBI said.

The appointment of an additional director, the regulator said, is undertaken as and when it is felt that the board needs closer support in regulatory / supervisory matters.

At a press briefing on Sunday, Rajeev Ahuja had assured depositors and investors that the bank is on course to achieve its goals for the year. This includes a reduction in credit costs. The December-quarter performance is expected to be better than the preceding three months, he said.

The regulator has full faith in the bank's management and its financial position, said Rajeev Ahuja. He reiterated that the lender was not aware of any governance-related investigations against any of its members.

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