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RBL Bank CEO quits ahead of term end, interim chief claims it has RBI support

The exit of the bank’s MD came after the RBI on Friday appointed Yogesh K Dayal, Chief General Manager, RBI, as an Additional Director on the board of the bank for a period of two years till December 23, 2023 or till further orders.

By: ENS Economic Bureau | Mumbai |
Updated: December 27, 2021 10:55:17 am
RBL Bank, RBL Bank CEO, Rajeev Ahuja, RBI, India news, Indian express, Indian express news, current affairsThe board appointed Rajeev Ahuja, currently the Executive Director, as interim MD & CEO of the bank with immediate effect.

Private sector lender RBL Bank’s new interim MD and CEO Rajeev Ahuja on Sunday claimed that the bank and its management have the full support of the Reserve Bank of India (RBI) after the RBI appointed its nominee on the board and long-term MD and CEO Vishwavir Ahuja proceeded on leave six months ahead of the end of his tenure.

The exit of the bank’s MD came after the RBI on Friday appointed Yogesh K Dayal, Chief General Manager, RBI, as an Additional Director on the board of the bank for a period of two years till December 23, 2023 or till further orders, whichever is earlier. The board appointed Rajeev Ahuja, currently the Executive Director, as interim MD & CEO of the bank with immediate effect.

“I can assure you the bank and its management have the full support of the RBI. I was the successor that the board chose yesterday, and the RBI nominee approved it,” Rajeev Ahuja said in a conference call on Sunday. “These developments are not on account of any concern on advances, asset quality and deposits level of the bank. We want to allay any concerns any of you may have in this regard. The bank has the full support of the RBI,” he said.

“The board has elevated an existing member of the management team to the interim MD & CEO role which should allay concerns on the strategy and smooth functioning of the bank as well as the strength of the overall franchise. The management team of the bank is also fully committed with Rajeev Ahuja to take the Bank forward,” the bank said in a statement.

“I do not want to pre-empt why Vishwavir Ahuja proceeded on leave six months before his term ends,” the new CEO said. On Saturday, the board accepted the request of Vishwavir Ahuja to go on leave.

Bank unions expressed concern over the developments in RBL Bank (earlier known as Ratnakar Bank). “In the background of the problems encountered by private Banks like Yes Bank and Lakshmi Vilas Bank last year, we urge upon you to immediately intervene in the matter in the interest of the depositors of this private sector bank and consider necessary steps including merger of this bank with a public sector bank,” CH Venkatachalam, General Secretary, All India Bank Employees Association (AIBEA) said in a letter to the Finance Ministry.

Earlier this year, RBL had sought approval from the RBI to appoint Ahuja for another three-year term at the bank’s helm. The regulator, however, had allowed RBL to extend his term by one year starting June 30, 2021.

Yes Bank and Lakshmi Vilas Bank were earlier bailed out after they got into financial and governance problems. Normally, the RBI appoints its nominee on the board of a private bank when it notices issues on the financial or governance front.

“The sequence of events leading to the sudden exit of Vishwavir Ahuja along with the induction of Dayal from the RBI as an additional member indicates that everything is not ok with the Bank,” Venkatachalam said. While the operating profit of the bank has been increasing in the recent years, the bulk of these earned profits have been adjusted towards provision for bad loans and with the result the net profit has remained very meagre, he said.

The bank had a deposit base of Rs 75,588 crore in the quarter ended September 2021 and advances of Rs 58,046 crore. The bank’s gross non-performing assets rose to Rs 3,130.93 crore or 5.4 per cent of gross advances as on September 30, 2021 from 3.34 per cent a year ago

However, the bank claimed everything is alright. “We wish to mention that the Bank is well placed to execute its business plan and strategy as communicated during our earnings call dated October 28, 2021. The business and financial trajectory continues to be on improving trend, post absorbing the challenges due to Covid 2 pandemic,” the bank said in a filing.

RBL Bank said the financials of the bank remain robust with healthy capital adequacy of 16.3%, high levels of liquidity as reflected through liquidity coverage ratio of 155 %, stable net NPA of 2.14%, credit deposit ratio of 7 4.1 % and leverage ratio of 10.0%, for the quarter ended September 30, 2021. “In addition, the bank has also improved the granularity of its deposits and advances,” it said.

The bank’s net profit fell to Rs 31 crore in the quarter ended September 2021 from Rs 144 crore a year ago largely due to a 5 per cent shrinkage in retail loans and also hit by a reversal in interest income from segments like microfinance. The RBI had imposed a fine of Rs 2 crore on RBL Bank for flouting board composition norms and rules related to the opening of bank accounts earlier this year.

Vishwavir Ahuja joined RBL Bank in July 2010. Prior to joining RBL Bank, he was the Managing Director & CEO of Bank of America, India from 2001 to 2009. Rajeev Ahuja has over 30 years of experience in the financial services industry., ,

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