RBL's Vishwavir Ahuja: A case of RBI discomfort with influential bankers

The Kohlapur-based lender turned swanky and state-of-the-art under him but the quick growth attracted central bank's scrutiny.

In June, the Reserve Bank of India (RBI) extended Vishwavir Ahuja’s tenure as RBL Bank’s managing director and chief executive for one year compared to three years sought by the lender’s board. It is not usual that a bank CEO’s term extension is shorter than sought by the board. The RBI did the same with then Yes Bank MD and CEO Rana Rapoor a few years back.

Clearly, the banking regulator sensed something with RBL. Ahuja’s one-year extension would have ended on June 29, 2022. He went on leave on December 25, a day after RBI appointed one of its officials, Yogesh Dayal, on the RBL board.

RBL was Ahuja’s bank. The former Bank of America MD & CEO turned the Kohlapur-based lender into a swanky, state-of-the-art one. In its early days under Ahuja, RBL grew very fast to attract the regulator’s attention and it was asked to slow down.

Ahuja became the MD & CEO of RBL, when it was known as Ratnakar Bank, in June 30 2010. According to RBL’s website, Ahuja has been instrumental in growing the bank's balance sheet close to 25 times making it one of India's fastest growing private sector Banks. “In August 2016, he spearheaded one of the country's most successful IPO's in recent history, commanding an oversubscription of over 70 times and a 22% listing premium over the issue price of Rs 225 per share,” the website said.

Ahuja holds an MBA from IIM-Ahmedabad and an MS degree in International Finance from the University of Michigan, USA.

Sources in central banking said governance issues at RBL Bank may have prompted RBI to appoint its own official in the board. “Ahuja may have become too influential in the board,” said a source.

RBI governor Shaktikanta Das in November asked bank boards to be vigilant, adding it is closely monitoring business models and strategies.

“The Board of Directors carry the responsibility of being guardians of the trust that depositors have reposed in a bank… To ensure good governance, the Reserve Bank has high expectations from the oversight role of the Board, its composition, Directors’ skill profile, strong risk and compliance structure and processes, more transparency and a robust mechanism of balancing various stakeholder interests,” Das said at a banking conclave organized by State Bank of India.

RBL insiders cite the example of the tie-up with Mastercard – the only payment network for issuing cards. When RBI’s clamp down on Mastercard’s expansion by asking them not to issue any new card, RBL’s business were impacted, even if Ahuja quickly announced a tie-up with Visa. Among Indian banks, only Yes Bank, apart from RBL had an exclusive tie-up with Mastercard.

Ahuja did not respond to 'Business Standard’s’' text message requesting for an interaction.

After burning its finger in previous episodes, like at the YES Bank and Chanda Kochhar’s tenure at ICICI Bank, RBI was proactive in RBL’s case – a second source said. “The regulator did not want to wait for the situation to get out of hand,” the source said.

To be sure, RBL’s is well capitalised, with 16% capital adequacy ratio. The non-performing assets are slightly elevated, with gross NPA at 5.4%, but not alarming.

In a statement on Sunday, the bank said that the developments over the weekend are not in any manner a reflection on the fundamentals of the Bank. “These developments are not on account of any concern on advances, asset quality and deposits level of the Bank,” it said.

The bank said business momentum and financial performance trajectory have been improving since the second quarter of this financial year as the bank recovered from the effects of the pandemic and that slippages peaked in the second quarter and will be improving this quarter and next as was guided previously. “The NPA position of the Bank will also be on an improving trend,” the statement said.