RBL Bank Interim Chief Says Fundamentals Are Intact

Amid speculations about the financial health of RBL Bank, a day after its managing director and CEO Vishwavir Ahuja stepped down and Rajeev Ahuja was made interim chief, the lender said on Sunday that it's business fundamentals were intact with scope for tremendous improvement.

Vishwavir Ahuja's exit was also followed by the Reserve Bank of India (RBI) appointing its chief general manager Yogesh K Dayal as an additional director on the board of RBL Bank. (Also Read: RBL Bank Chief Vishwavir Ahuja Steps Down, RBI Official Joins Board)

Rajeev Ahuja, the bank's newly-appointed chief, told reporters that the bank does not anticipate major capital needs in the short term, countering fears of problems in management.

In recent months, it has been reported that some employees of the bank sought the finance ministry's support to oversee operations as they believed regulatory frameworks were being ignored by the bank's top management.

He said the bank will stick to all the targets spelled out at the earning call in September, but conceded that microfinance lending is an area which requires more attention.

“We need to up the game on service, governance, digital and risk areas,” Mr Rajeev Ahuja told reporters.

He claimed that the board of the bank had already chosen him as the successor to Mr Vishwavir Ahuja, and RBI-appointed additional director Mr Yogesh Dayal also voted for his appointment as MD and CEO at a meeting held over the weekend. The central bank is fully behind the bank and its strategy, he added.

Mr Vishwavir Ahuja, who's leave announcement came after the RBI move and six months before the end of his term, had to do so on medical grounds, his successor said, without sharing the details.

The former chief was central to the transformation exercise at the bank by a team and the new leadership will carry forward on the same agenda, Mr Rajeev Ahuja said.

Asked about the RBI action, which has a few precedents, the interim chief said the central bank would have its own specific reasons to make such an appointment, but declined to share any details.

To a question on what he feels will be the focus areas for RBI, he pointed to compliance and risk management as the possible priorities but was quick to add that these are the same as the bank's own internal interests as well.

RBL Bank, which had seen a pressure on deposits after the RBI action on Yes Bank in 2020, has excess liquidity of over Rs 15,000 crore and also many lines of liquidity, Mr Rajeev Ahuja said, adding that it is taking measures to reach out to customers.

The last 24 hours since the spate of announcements have not seen any major withdrawals, he said, stressing that the case of Yes Bank was different.

The bank will look at capital raising exercise not before the end of 2022-23, he said, adding that at present, its core capital buffers stand at over 15 per cent courtesy a Rs 1,500-crore fundraise in November 2020, and it will not go for a capital raising before it slips below 14 per cent.

The growth is back at the bank after the second COVID wave, Mr Rajeev Ahuja said, pointing out that he will continue on the strategy to reduce the reliance on the unsecured credit front. The bank will return to growing its book at the normal level of 15-20 per cent in 2022-23, the interim head informed further.