RBL Bank attempts to boost depositors' trust after CEO's sudden exit

Gradually settling down after turbulence till Monday, private lender RBL Bank will engage with retail customers, especially depositors, now and in the fourth quarter while the lending business happens in the normal course.

Depositors’ confidence was shaken following sudden developments like MD & CEO V Ahuja proceeding on medical leave and the Reserve Bank of India (RBI) appointing Yogesh Dayal as its nominee on the board of RBL Bank. 

A large write-off in a loan account was believed to be the trigger for the regulator to step into the affairs of the bank. However, the lender declined to comment on the issue of write-off.

The lender had to make special efforts to reach out to retail non-resident Indian (NRI) clients. This was to give them confidence and address apprehensions, said bankers in direct knowledge of developments.

The regulator stepped in to clear the air on Monday by issuing a statement on the healthy financial profile of the bank but some damage was already done.

While hardly any pressure was experienced in terms of customers rushing to withdraw deposits, the bank's stock price did crash on Monday. The share also was down 2.5 per cent at Rs 127.05 per share on Friday on BSE.

On queries by Business Standard regarding the deposit position, the bank said it has been maintaining liquidity coverage ratios (LCRs) and surplus liquidity for a long time now. 

RBL took multiple steps, including proactively reaching out to customers over telephone/emails. ATMs and branches had sufficient liquidity to meet any customer demand. 

The financial position of the bank continues to be stable and this event was not related in any way to the franchise. Also, the RBI clarification bolstered confidence. 

However, in case a customer still wishes to withdraw their money, the bank will honour the commitment. “We are seeing normalcy return quickly,” it said.

RBL said it executes loans, deposits and fee income on a daily basis and it materially improved on granularity on both sides of the balance sheet. 

Clearly a week before a quarter end doesn’t materially alter the trajectory of the bank’s financials, it said.

RBL’s priorities in the near and medium terms continue to be focused on continued granularisation of both sides of the balance sheet. Some priorities include introduction of new asset products and scaling up the digital banking offering, among others.

There is no change in the strategic direction or plan of the bank due to the recent events. “We expect the execution to accelerate on the above mentioned priorities,” it added.