'RBL Bank stable, well capitalised': RBI assures stakeholders, depositors as shares plunge

Caution was sounded after the company's top boss went on medical leave and RBI named an additional director to RBL's board over the weekend

The Reserve Bank of India (RBI), in a statement on RBL Bank, said that the bank is well capitalised and the financial position of the bank remains satisfactory. The central bank said that its intervention has been only for supervision.

"As per half yearly audited results as on September 30, 2021, the bank has maintained a comfortable Capital Adequacy Ratio of 16.33% and Provision Coverage Ratio of 76.6 per cent. The Liquidity Coverage Ratio (LCR) of the bank is 153 per cent as on December 24, 2021, as against regulatory requirement of 100 per cent," the RBI stated in its release.

The RBI has made an appointment to the bank under Section 36AB of the Banking Regulation Act, 1949.

Meanwhile, RBL's stock tanked over 13 per cent on Monday. "We believe that the RBI's long-term discomfort with 1) the unsecured heavy asset-side construct (MFI + Cards at 31 per cent) creating asset quality risks as seen during Covid and 2) poor compliance with its directives (about risk management/governance/succession) could have possibly led to its swift intervention, apart from ensuring a smooth management transition and comforting the stakeholders," Emkay Global said in its report on RBL.

Also read: 'RBL Bank didn't provide satisfactory answer for RBI appointing director'

Emkay global also states that in order to comfort investors, more explanation will be required from management to justify the sudden exit of Vishwavir Ahuja, nearly six months before his term was to end.

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