No issue with asset quality, will work on governance and risk fronts: RBL Bank’s new chief

Mumbai: RBL Bank’s interim chief executive and managing director Rajeev Ahuja on Sunday sought to allay concerns around the health of the private sector lender, stressing that the events over the weekend are not linked to the quality of advances or asset quality. Rajeev, an executive director with the lender who was elevated by the board after his predecessor Vishwavir Ahuja went on leave following the appointment of an additional director by the RBI on the bank, asserted that the bank will post better profits in the December quarter than the preceding September quarter.

He said the bank will stick to all the targets spelled out at the earnings call in September, but conceded that microfinance lending is an area that requires more attention.

“We need to up the game on service, governance, digital and risk areas,” Rajeev told reporters.

He claimed that the board of the bank had already chosen him as the successor to Vishwavir, and RBI-appointed additional director Yogesh Dayal also voted for his appointment as MD and CEO at a meeting held over the weekend. The central bank is fully behind the bank and its strategy, he added.

Vishwavir, who’s leave announcement came after the RBI move and six months before the end of his term, had to do so on medical grounds, his successor said, without sharing the details. Vishwavir was central to the transformation exercise at the bank by a team and the new leadership will carry forward on the same agenda, Rajeev said.

Asked about the RBI action, which has a few precedents, Rajeev said the central bank would have its own specific reasons to make such an appointment, but declined to share any details.

To a question on what he feels will be the focus areas for RBI, Rajeev pointed to compliance and risk management as the possible priorities but was quick to add that these are the same as the bank’s own internal interests as well.

RBL Bank, which had seen pressure on deposits after the RBI action on Yes Bank in 2020, has excess liquidity of over Rs 15,000 crore and also many lines of liquidity, Rajeev said, adding that it is taking measures to reach out to customers.

The last 24 hours since the spate of announcements have not seen any major withdrawals, he said, stressing that the case of Yes Bank was different.

The bank will look at capital raising exercise, not before the end of FY23, he said, adding that at present, its core capital buffers stand at over 15 percent courtesy a Rs 1,500-crore fundraise in November 2020, and it will not go for a capital raising before it slips below 14 percent.

The growth is back at the bank after the second COVID wave, Rajeev said, pointing out that he will continue on the strategy to reduce the reliance on the unsecured credit front. The bank will return to growing its book at the normal level of 15-20 percent in FY23, he said.

At present, a bulk of the bank’s retail loans come from microfinance and credit card portfolios which are unsecured. It can be noted that it has suffered reverses on both fronts and microloans came to prick a lot in the second wave of the pandemic.

Rajeev said the bank will get its net non-performing assets down below the 2 percent level by the targeted March 2022, from the 2.33 percent in September 2021. The credit costs will also stick to the target of being 55-60 percent of the April-September levels in the second half of the fiscal, he added.

As for the stress on the microfinance book, he said it has been recognized either on the profit and loss account or by restructuring the particular asset and exuded confidence that all the troubles will be behind by the fourth quarter. To a specific question on whether he is aware of inquiries against any of the directors, Rajeev said he is not aware of it.

He said for the next week, his focus is to stay calm, rally the over 16,000 employees of the bank, and ensure that it gets away with only scars, and sounded hopeful that the difficulties will be behind in the next 2-3 weeks.