Cautiously building growth momentum: RBL Bank MD & CEO Vishwavir Ahuja

Having capital helps in case a good inorganic opportunity - small or medium sized - comes up, said CEO Ahuja

VISHWAVIR AHUJA, managing director and chief executive officer of RBL Bank, says the objective of enlisting Baring PE Asia, the continent’s largest private equity firm, is to make the bank ‘growth-ready’. In an interview to Hamsini Karthik, he says the bank’s asset quality and deposit growth have been quite satisfactory. Edited excerpts:

RBL Bank had two rounds of capital raise in a year. What was the objective?

The bank seeks to build its capital buffer. Our capital adequacy has risen to 18.7 per cent from 16.50 per cent, following investments from Baring PE Asia-owned Maple II B V, ICICI Prudential Life Insurance Company, and two existing investors. These were Gaja Capital, which has been an anchor investor since 2011, and CDC Group Plc, our largest shareholder since March 2014. 

Considering the future, it is good to have an additional capital buffer. When new opportunities arise, we will be positioned strongly. The idea was not just to do another QIP and raise financial capital; we wanted institutional investors of high pedigree, which is why we chose preferential placement. Having capital helps in case a good inorganic opportunity — small or medium sized — comes up.

The share of retail loans has been increasing, and RBL Bank has the highest unsecured book among peers. What is the way forward?

Retail is our main growth space, and we have been focusing more on cards and micro-banking. There have been hiccups owing to Covid, but all lead indicators are now turning positive. Not only are we well-positioned for growth, but are cautiously building growth momentum in retail.  In terms of size, scale, and market share, we are already in the top five. While cards and micro-lending are unsecured, we also have a secured lending business in retail (business loans), and there is wholesale banking in which 95 per cent of loans are secured. There is a counter-balance in the portfolio. 

You ventured into affordable housing…

It’s complementary to our franchise in semi-urban and rural India. There is a strong distribution network, and some more systems need to be built that we are building up slowly. The portfolio is of Rs 200 crore. First benchmark will be Rs 1,000 crore after which we will pause and evaluate.

How well placed is the wholesale book?

We are in good shape. We saw 4-5 large corporate accounts slip into pain in July-August last year, which put us strongly on a conservative risk management and mitigation path. We have a stable base now, albeit at a price — we sacrificed revenue and absorbed provisions. While we will build back wholesale, this growth will be softer compared to retail.

How would you choose between recasting or recognising an account as an NPA?

We are very clear about our position — if an account is headed towards NPA and not likely to revive, we will take the provision immediately. Only the loans for which there is genuine viability, will restructuring take place.