The share price of RBL Bank has fallen more than 18% and has come close to Rs.107, RBI has appointed an additional director on RBL Bank. And whenever RBI appoints an additional director on a bank, the volatility in the stock increases.
A similar sequence has been faced by the shareholders of RBL Bank this weekend. Now on this matter, neither RBL Bank has told in some detail nor RBI has commented on it.
Although RBL Bank had also arranged a meeting last evening, in that also they have not told anything special.
Two things that have been going on since last week and everyone knows is that Vishwavir Ahuja, MD & CEO of the company has gone on leave immediately. Along with this, RBI has also appointed additional directors.
Why is the share price of RBL Bank falling?
How fast the company’s gross NPA has increased between 2019 and 2021, it was only 2.60% in September 2019 from there it increased rapidly till September 2021 at 5.40%. So this level is very risky.
NET NPA is also growing very fast here, the bank’s NET NPA was very low in December 2018 just 0.72% from there it has grown rapidly to 2.14% by September 2021.
In this case, it has gone up to 2.14%, which shows that the risk of the loan has increased a lot.
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RBL Bank CEO (Vishwavir Ahuja)
From the year 2010, when Vishwavir Ahuja became the CEO of RBL Bank, he saw that there is a huge problem here, the problem is that the loan book of the bank is too concentrated, only in the real estate sector, the company has given most of the loans.
He also observed that the real estate sector is struggling a lot, if we do not diversify the loan book now, then this thing can create a big problem going forward. Realizing this, he brought down the 47% exposure of the real estate sector to less than 15%.
Due to this, the financial health of the bank also started getting better gradually, after solving this big problem of the bank, Vishwavir Ahuja had an eye on the growth of the bank and how we can make the bank grow fast.
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And that’s why they focused on the retail loan book, which rapidly grow their retail loan book, and the retail loan book of the bank then gradually increased to Rs 30,000 crores.
He focused in the retail loan book on unsecured loans, we had seen that in the case of Yes Bank, a similar decision was taken. Too many unsecured loans were given for growth.
Below you can see the company’s total loan in the image, it includes retail as well as wholesale and here you can see that the maximum loan is given – given in the form of a credit card which is the unsecured loan. That is, there are no guarantees behind it.
The retail loan book of RBL Bank as of 30 September 2021 was 30,784 crores. Out of which 65% loan is unsecured.
The company’s revenue compound has grown by 46% annually from 2011 to 2021 (since Mr. Vishwavir Ahuja became CEO of the bank). Growth is visible, profit also compounded here has increased by 45% annually but the share price of the company has fallen by 10% annually.
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This article is only for education purpose and the author has his own views and research, so if you invest in these stocks then do it at your own risk and do the research yourself before investing.
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The share price of RBL Bank has fallen more than 18% and has come close to Rs.107, RBI has appointed an additional director on RBL Bank. And whenever RBI appoints an additional director on a bank, the volatility in the stock increases.
RBL’s gross NPA has increased between 2019 and 2021, it was only 2.60% in September 2019 from there it increased rapidly till September 2021 at 5.40%. So this level is very risky.