Shares of RBL Bank crashed 23 per cent to hit a 52-week low of Rs 132.35 on the Bombay Stock Exchange (BSE) after the sudden exit of long-standing MD and CEO Vishwavir Ahuja, and the induction of RBI-appointed Yogesh Dayal as an additional director on the bank’s board.
The stock opened 10 per cent lower at Rs 155.25 against the previous close of Rs 172.50. At 11:36 hours, it was trading at Rs 140.25, 18.70 per cent lower on the BSE.
RBL Bank on Saturday said its board has approved the request of its MD and CEO Vishwavir Ahuja to proceed on leave with immediate effect. The bank’s board has appointed Rajeev Ahuja, currently Executive Director, as the interim MD and CEO with immediate effect.
“The board of directors of the bank at its meeting held today i.e December 25, 2021, accepted the request of Mr. Vishwavir Ahuja to proceed on leave with immediate effect,” RBL Bank said in an exchange filing.
Rajeev Ahuja’s appointment will be subject to regulatory and other approvals, the filing said, adding that the other terms and conditions of his appointment, such as remuneration, would remain unchanged.
The bank also informed that the Reserve Bank of India (RBI) has appointed its chief general manager Yogesh K Dayal as an additional director on its board.
Dayal’s appointment is for a period of two years, starting from December 24, till December 23, 2023, or till further orders, whichever is earlier.
“These developments are not on account of any concern on advances, asset quality and deposits level of the Bank. We want to allay any concerns any of you may have in this regard. The Bank has the full support of the RBI,” RBL Bank informed.
Brokerage house Motilal Oswal noted that RBL Bank has reported a weak operating performance in recent years on elevated provisions and tepid NII trends, which adversely affected profitability. On the business front, loan growth remained muted, affected by a sharp decline in micro banking and the business loan portfolio.
However, it added that the credit cards segment has shown a healthy recovery as card acquisition has picked up, while spends have seen a robust recovery. On the asset quality front, slippages remain elevated, while the increase in the restructured book was led by the secured business loans and the Micro Banking portfolio.
Motilal Oswal said that the current developments have raised concerns about the bank’s ability to sustain a turnaround in its operating performance, while at the same time raising worries of similar actions by the regulator on other mid-size Banks, where the operating performance has been sub-optimal.
“We thus put our rating under review and remain watchful of further developments and await further clarity in the 3QFY22 result,” the brokerage firm added.