Mr Vishwavir Ahuja, the MD & CEO of RBL bank is stepping down. Though the technical term used is ‘going on leave’, for all practical purposes it’s innings over for him at the bank.
Key point to note –
- Mr Ahuja has been leading RBL for more than a decade and is responsible for it’s turnaround. He led the transformation of the 100-year old Ratnakar Bank by bringing in new investors and the management. He was the CEO of Bank of America previously.
- Recently, Board had proposed another term for him to RBI. However, as per newspaper reports RBI only gave him extension for a short term upto 2022. As per recently revised norms, non promoter MD, CEO can have a tenure upto 15 years at the private banks. Given that Mr Ahuja had joined RBL in 2010, he could have continued till 2024 as per the norms. If he was not given the extension, there must be something in RBI’s mind.
- RBI a day prior i.e., on December 24, 2021 also appointed it’s Chief General Manager, Mr Yogesh Dayal as an Additional Director on RBL’s board.
- The board has approved the appointment of Rajeev Ahuja, Executive Director, as interim Managing Director & CEO with immediate effect.
Appointment of an Additional Director by RBI and the veteran MD & CEO stepping down are surely going to raise concerns in the mind of the investors. Though the bank has informed that the operations are under control and continuously improving, very unlikely that it’s going to assuage the doubts. Otherwise also there have been concerns about RBL’s asset quality since the beginning of Covid pandemic.
News like these are further going to make investors cautious about the Indian banking & finance sector in general and smaller banks in particular.
The interim MD & CEO organized a analyst/ investor call today to try calm the nerves.
Key points –
– He reinforced that bank’s performance and situation continues to improve and the same can be expected going forward.
– He didn’t inform of any surprising new event that is unknown and has resulted
in appointment of additional director by RBI and exit of Mr Ahuja.
Based on the overall feelers from him on the call –
Everything seems to be business as usual.
Hence, it’s really confusing to me why RBI has decided to appoint the additional director
Guess, RBI needs to clarify asap to calm the nerves. If it’s a constructive appointment, it should be informed so plain and clear.
Without that, I don’t see why speculations would not be made !
Rakesh Jhunjhunwala, RK Damani approach RBI with request to buy 10% stake in RBL Bank
The excitement never ends. This was the best that could have been done to save the wrath of the stock markets.
On December 27, 2021, finally RBI said the following –
It’s helpful that finally RBI has said something on the matter. However, the main question remains – reason for appointment of Additional Director. The provided clarification is inadequate for the purpose of my analysis.
As per newspaper reports –
Reason for MD stepping down and RBL appointing an Additional Director (AD) – Bank’s resistance to provide details to RBI about a Rs 300 crore loan that had turned NPA with 7 months of the sanction. Loan was sanctioned in 2018.
RBI supposedly gave sufficient time to RBL to provide the explanation. However, bank’s failure to do so prompted RBI to immediately ask the MD to step down and also appoint AD to keep a closer watch on the bank’s operations.
If these reports are true, then one can expect much more action in RBL.
RBI has approved Rajeev Ahuja’s appointment as interim MD & CEO only for a period of 3 months effective December 25, 2021 or till the new MD & CEO is appointed, whichever ends earlier.
Bank has informed that it has formed a search committee to identify candidates for the post of MD and CEO from within and outside the Bank. The search committee comprises of the chairman of the nomination and remuneration committee, two members of the Board and one external expert. The Board has also decided to appoint a reputed recruitment firm for the purpose.
Given the short timelines and sequence of events, RBI surely has decided to put RBL under a tight scrutiny.
To me, lot of internal happenings at RBL still seem to be unknown to the wider public.
RBL Bank on Wednesday (April 20) said that it’s board has finalised names of candidates for the position of regular MD & CEO of the Bank and approved making of an application to Reserve Bank of India (RBI).
The name would be disclosed post receipt of approval from the RBI.