RBL Bank Sees 11% Drop In Retail, Small Business Deposits

RBL Bank saw a draw down in deposits in the October-December quarter. This, as news of the chief executive's abrupt departure and the regulator's decision to appoint a director on the private sector lender's board likely led to nervousness among depositors.

Retail and small business deposits fell by more than a tenth.

According to provisional quarterly data released by the bank:

• Total deposits were at Rs 73,637, down 2.58% quarter-on-quarter.

• Current account and savings account deposits fell to Rs 25,316 crore, down 5.3% over the previous quarter.

• The CASA ratio fell to 37.8% compared with 41.6% a quarter ago.

• Retail deposits and deposits for small business customers fell to Rs 27,871 crore, down 11.3% over the three-month period.

• The bank's liquidity coverage ratio is at 146% vs 155% as of September.

On Dec. 25, RBL 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.

To quell undue speculation, the RBI, in a rare statement, said the financial health of RBL Bank is stable.

Since then, a committee has been appointed to select a new permanent chief executive from within internal and external candidates.

On Rating Watch

In a note dated Dec. 31, 2021, released over the weekend, rating agency ICRA put the bank's rating on 'watch with developing implications'.

ICRA said bulk deposits (of ticket size more than Rs 2 crore) still account for a relatively high share in the overall deposits for the bank. "Accordingly, the bank's ability to roll over deposits as well as demonstrate a reasonable degree of stability in its deposits base will remain critical for sustaining liquidity in the near term."

It said RBL Bank has been sitting on excess liquidity, supported by the "degrowth" in advances over the last 18 months till September 2021. Over this period, advances were lower by 3%, while deposits were higher by about 31%, resulting in excess statutory liquidity ratio of Rs 12,000-17,000 crore during April-September 2021. "As a result, RBL has reported positive cumulative mismatches in all its near-term maturity buckets that are less than one year," said ICRA.

In addition, the bank's LCR also remains above the regulatory minimum of 100%. The higher SLR and LCR point to the bank's ability to withstand some degree of stress. The bank's deposit base, however, will be "critical for RBL's future scale of operations and hence its profitability and internal capital generation".