RBL Bank’s Turnaround Story: Is The Worst Over For The Stock?
RBL Bank's crisis is over and the confidence is returning — but is the hard part done?
In June 2022, RBL Bank Ltd. was under pressure. The Reserve Bank of India had removed then CEO Vishwavir Ahuja over compliance concerns. Investor confidence fell, and the stock declined 80% from its 2019 high.
When R Subramaniakumar took charge as managing director that summer, the bank faced stress. The share price stood at Rs 77, down from a peak of nearly Rs 700.
By December 2025, the situation had changed. The stock more than doubled over the past 12 months to about Rs 300 a share. The trigger was a $3 billion investment from Dubai-based Emirates NBD Bank.
The move points to a turnaround, but the balance sheet shows mixed trends. The bank has stabilised but has not fully recovered.
Here is what investors need to know:
The Emirates NBD Deal: A Safety Net
The key development is the partnership with Emirates NBD, which includes a $3 billion investment for a stake of up to 60% in RBL Bank. The deal lifted investor confidence.
The deal has three effects:
Capital injection: It lifts RBL’s net worth to about Rs 42,000 crore.
Global reach: It supports NRI banking and trade finance, where RBL had limited presence.
Expansion capacity: It provides funds to expand the branch network, which now stands at 561 branches.
The deal also brings execution risk. Management must integrate a foreign majority shareholder and deliver growth plans.
The resignation of the chief financial officer in December 2025 adds uncertainty, as continuity in the finance function matters during this phase.
The Reserve Bank of India approved the deal. Foreign ownership in Indian banks is usually capped at 15%. Allowing a stake of up to 60% signals the regulator’s support for the transaction.
Subramaniakumar’s mandate was to increase secured retail loans, raise retail deposits, improve asset quality and restore regulatory confidence.
RBL reported gross non-performing assets of 2.32% in Q2, compared with 2.88% a year earlier and 3.8% in fiscal Q2 of 2023.
Over the past two years, RBL shifted its loan book towards retail lending, which helped reduce stressed assets.
Making Money Costs Too Much Money
RBL’s operating efficiency remains a concern. The cost-to-income ratio, which measures operating expenses against income, stood at 70.7%.
Private banks usually target a ratio between 50% and 60%. RBL’s ratio points to pressure on profitability. The ratio was 64.3% in fiscal 2024 and 64.7% in fiscal 2025.
This means the bank spends about Rs 71 for every Rs 100 it earns. RBL said higher costs reflect spending on technology and branches, but margins remain limited until costs decline.
In Q2, RBL reported net profit of Rs 179 crore, down 17% year on year. The bank’s loan book exceeds Rs 1 lakh crore, leaving limited margins.
Deposits: A Vote Of Confidence
Deposits reflect customer trust. RBL recorded growth here.
Total deposits rose 8% to Rs 1,16,665 crore.
CASA deposits increased 3%.
CASA deposits carry lower interest costs and support margins.\
The Verdict
RBL Bank has moved from crisis to stabilisation. The recent stock rally reflects expectations from the Emirates NBD deal.
Bad loans remain a concern, and costs stay high. RBL trails peers such as Federal Bank on efficiency.
Brokerage estimates on Dalal Street see the stock rising about 11% based on consensus price targets.
The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.
