RBL Bank’s MD steps down. RBI decides to look closely. Situation becomes confusing.

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.

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