RBI Says RBL Bank Well Capitalized With Satisfactory Financial Position

The Reserve Bank of India (RBI) said on Monday that RBL Bank is “well capitalized and the bank’s financial situation remains satisfactory”, and that there is “no need for depositors and other stakeholders” to react speculative reports related to banks.

The central bank also said that the appointment of an additional director in any private bank is done “as and when it is felt that the board needs closer regulatory support / surveillance “.

RBL Bank, the central bank said, remains in good health and, according to the audited half-year results as at September 30, 2021, the bank has maintained a “comfortable capital adequacy ratio of 16.33% and a capital coverage ratio. provisions of 76.6%. The bank’s short-term liquidity ratio is 153% as of December 24, 2021, compared to the regulatory requirement of 100%.

The bank’s action closed down 18.32% to close at Rs 140.90 each on BSE.

The action slipped after the bank’s chief executive and CEO Vishwavir Ahuja went on leave on December 25 and an interim CEO was appointed. The bank has also started looking for Ahuja’s replacement.

Incidentally, the RBI had appointed an additional director in RBL Bank on December 24. The RBI, by its clarification, tried to suppress “the speculation relating to the RBL Bank in certain districts which seems to stem from the recent events surrounding the bank”.

The central bank said that “the appointment of additional directors in private banks is undertaken under section 36AB of the Banking Regulation Act 1949 when it is deemed that the board of directors is in need of closer regulatory / supervisory support “.

RBL Bank had assured investors that it was “well placed to execute its business plan and strategy, as communicated in our call for results on October 28, 2021”.

“The commercial and financial trajectory continues to improve, having absorbed the challenges of the Covid 2 pandemic”, and the bank’s finances are solid.

“In addition, the bank has also improved the granularity of its deposits and advances,” the bank said.

RBL Bank CEO and interim managing director Rajeev Ahuja, who was previously the bank’s executive director, attempted on Sunday to allay concerns about the bank’s health. He said the weekend’s events are unrelated to the quality of RBL’s assets.

The bank’s board of directors is currently engaged in the search for Rajeev’s successor, a process that can take four to six months.

During an analyst call, Rajeev said there are five to seven people in the management team who are vying to take over as a full-time chief executive and CEO. In addition to the internal pool, the board will review external candidates, management said.

Meanwhile, the All India Bank Employees Association (AIBEA) said the Center must protect the interests of RBL Bank depositors. It should consider merging RBL with a state bank, the industry union said on Sunday.

There are also reports that RBL has abused retail credit, microfinance and credit cards. As a result, he burned his fingers, which weakened finances, AIBEA said.

“We are worried and concerned about the developments taking place in the affairs of RBL Bank,” AIBEA said in a letter to Minister of Finance Nirmala Sitharaman.

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