RBI Nominates Yogesh Dayal to the RBL Bank Board as CEO goes on Leave
It was a tense weekend for the equity investors and depositors of RBL Bank as the CEO Vishwavir Ahuja proceeded on indefinite leave. There were no reasons given and Rajeev Ahuja was appointed as interim CEO in his place.
What was more interesting was that Ahuja’s move came just a day after RBI nominated Yogesh Dayal as additional director on the board of RBL Bank. At a specially convened press conference, Rajeev Ahuja assured depositors and investors that all was fine at the bank.
If you go by the reaction of the stock markets on 27-December morning, the markets are clearly not buying the “All is well” line offered by the RBL Bank top management. Markets are trying to read between the lines, although not much is available as credible data.
The price reaction was quite violent. The RBL Bank stock opened nearly 10% lower on 27-December, but soon dipped 20% falling vertically as the sellers on the counter far exceeded the buyers. In early trades, the stock had touched a 52-week of Rs.130 before settling at around Rs.138 levels at 11.00 am on Monday.
While the net NPAs of the bank stand at 2.14%, which is numerically not worrisome, investors are not buying these numbers. One of the major exposures of RBL Bank is to Vodafone, which continues to be under a cloud, despite the government relief package.
The other concern is corporate governance. In 2019, it emerged that RBL Bank had a huge exposure to Café Coffee Day. Worse still, it emerged that RBL Bank insiders had short sold the stock ahead of this news coming out in the market. That had raised serious issues of corporate governance and that cloud is yet to go away.
After the Yes Bank episode, RBI is not taking chances with systemically important banks as there is an element of public trust involved. Also investors, are unwilling to go by the assurances given by the bank managements.
For now, the only thing that is known is that the long-standing CEO has proceeded on leave after Yogesh Dayal of the RBI was nominated to the board. Normally, RBI nominates an additional director to the board of banks only when it believes that there could be serious systemic lapses in the form of dubious asset quality or large off-balance sheet items.
Late on Sunday, there were reports that two of India’s most respected investors; Rakesh Jhunjhunwala and RK Damani had approached the RBI to pick up a 10% stake in RBL Bank. However, that has not been officially confirmed by either of the investors or by RBI.
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