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The Reserve Bank of India has approved the appointment of Vishwavir Ahuja as the Managing Director and CEO of RBL Bank for a one-year period with effect from June 30, 2021.
“The re-appointment is subject to the approval of shareholders at the ensuing Annual General Meeting,” RBL Bank said in a regulatory filing on Friday.
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DCB Bank, RBL Bank and Federal Bank will have to look for new CEOs after the term of current ones ends in the next three years.
DCB Bank CEO Murali Natrajan has completed 12 years in the job and got a year’s extension this month.
Federal Bank CEO Shyam Srinivasan will complete 11 years in September when his second consecutive one-year extension ends.
RBL’s Vishwavir Ahuja also completes 11 years in June and is awaiting the RBI nod for another three-year term after the bank’s board approved such a proposal in January. Federal Bank and RBL boards have sought three-year terms for their CEOs. It remains to be seen whether the RBI will give this extension, which is within the 15-year limit.
Why the move?
The regulator’s directions on limiting CEO tenures come after the publication last summer of a discussion paper that had sought a review of the governance framework at commercial banks. A bank CEO who is also a promoter or major shareholder cannot hold these posts for more than 12 years, the revised RBI rules said.
Experts say governance lapses at Yes Bank also prompted the move by the central bank.
The new norms do not apply to bank CEOs whose tenures have already been approved by RBI.
“Banks with MDs & CEOs or whole-time directors (WTD) who have already completed 12 or 15 years as MD & CEO or WTD, on the date these instructions come into effect, shall be allowed to complete their current term as already approved by the Reserve Bank.”The banking regulator said
The impact
Bankers said the central bank’s move could hurt stability at small and medium private sector banks that require strong leadership and an understanding of the business to stand out in a competitive lending business. In a related move, the RBI has directed that half the directors in banks be independent ones. It has also put an annual Rs 20-lakh ceiling on fees to be paid to independent directors. It also said that independent directors have to chair bank boards.
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This collaboration will enable Tide to bring its platform to the Indian markets with a full-fledged launch. Under the tie-up, businesses, especially small and medium-sized enterprises have an option to open current and savings accounts at RBL Bank through Tide’s business platform.
Depending on customer requirements, the Bank can also integrate its payment APIs. Tide plans to acquire 25,000 customers in the next financial year and scale up to two million customers in the next five years.
Apart from supporting the organised SME sector, Tide will also focus on serving the unregistered and unorganised sector, helping bring these SMEs into the mainstream by providing them access to RBL Bank’s plethora of business banking products and services.
Surinder Chawla, Head Branch Banking, RBL Bank said, “RBL Bank has agile technological capabilities and compelling customer offerings to help Tide build a strong foundation in the country and scale up its business. Together, we are passionate about delivering innovative and integrated services that will improve the overall banking experience for the SME segment.”
Oliver Prill, Tide CEO said, “RBL Bank offers industry leading banking, payments and security technology, giving Tide the foundations that will enable us to build the best possible service to help SME owners save time and money through its digital banking capabilities.
Prill added, “With this partnership, we are ready to begin initial testing of Tide India, before entering into similar partnerships with other leading fintech providers to build our platform during the course of 2021”
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Private sector lender RBL Bank on Tuesday said it will provide banking infrastructure for Tide’s India platform, which is focussed on small and medium enterprises.
“This collaboration will enable Tide to bring its platform to the Indian markets with a full-fledged launch,” it said in a statement on the tie-up with Tide India, which is a part of business banking fintech Tide UK.
“Under the tie-up, businesses — especially small- and medium-sized enterprises — have an option to open current and savings accounts at RBL Bank through Tide’s business platform. Depending on customer requirements, the bank can also integrate its payment APIs (application programming interfaces) to enable Tide users to make seamless transactions from Tide’s platform,” it further said.
Apart from supporting the organised SME sector, Tide will also focus on serving companies in the unregistered and unorganised sector. It plans to acquire 25,000 customers in the next financial year and scale up to 20 lakh customers in the next five years.
“With this partnership, we are ready to begin initial testing of Tide India, before entering into similar partnerships with other leading fintech providers to build our platform during the course of 2021,” said Oliver Prill, Tide CEO.
Surinder Chawla, Head – Branch Banking, RBL Bank, said: “RBL Bank has agile technological capabilities and compelling customer offerings to help Tide build a strong foundation in the country and scale up its business.”
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Private sector RBL Bank is eyeing aggressive branch expansion over the next few years and plans to open at least 75 new branches annually.
“We have always, at the maximum, done 30 to 40 branches, except for a year or two when we did 55 to 60 branches. But now, we have agreed to do upwards of 75 branches a year for the next two-three-four years,” said Surinder Chawla, Head, Branch Banking, RBL Bank.
RBL Bank completes fund raise of ₹1,556 crore
As on December 31, 2020, the lender had about 403 branches and hopes to end this fiscal with about 425 branches.
In an interaction with BusinessLine, Chawla noted that with branches come multiple new customers and also the opportunity, therefore, to cross sell.
Explaining the strategy for the branch expansion, he said, “As a bank, we are very small right now in terms of our network, which is not even present in some capital cities of the country. So, we have a bit of a catch-up to do.”
With the Covid-19 pandemic and lockdown, the lender has also invested significantly in digital technologies.
RBL Bank launches contactless banking initiatives
“What digital does is, first, it increases the catchment area for the branch, second, it can give a significant fillip in terms of cost save for operations, and three, in terms of acquisition, it can get a much higher number of scale of customers than what one would get only from the branches,” Chawla said.
“Adding a branch actually serves multiple purposes for our customers, it gives us liability granular, it gives us stability, it gives a fee,” he said.
RBL Bank has also been working on increasing granularity of retail deposits and retiring high-cost chunky money, he further noted.
“Our retail has been growing very well. On the retail side, we are going to end the year at about 60 per cent growth on the CASA,” he said, adding that the bank has also tided over issues emanating after the YES Bank crisis last year when there was a flight of deposits from many private banks.
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Private sector lender RBL Bank said its Managing Director and CEO, Vishwavir Ahuja, has sold 14.4 lakh shares of the lender between February 19 and 25 for about ₹35.07 crore..
In a regulatory filing, the bank said this transaction was “as per the pre-clearance taken” by Ahuja.
RBL Bank MD sells 18.92 lakh shares for ₹38.52 crore
According to the extract of intimation by Ahuja to the bank’s Compliance Officer, the sale of shares was to finance the purchase of a family house.
“The sale proceeds shall be utilised primarily to purchase and build a family home and take care of other family commitments. This is a very essential and much delayed imperative for the family’s well-being,” Ahuja said in the intimation, which was included in the bank’s regulatory filing.
Vishwavir Ahuja re-appointed as RBL Bank chief
“The sale represents approximately 17 per cent of my and my family’s total holdings and we will continue to retain approximately 70 lakh shares of RBL Bank, almost 70 per cent of my peak holdings since joining the Bank in 2010,” Ahuja further said, adding that the sale of shares is purely for personal and family reasons.
The completion of the property transaction may require him to sell another three per cent to four per cent of his holdings over the next few months, he said.
Ahuja reiterated his commitment to RBL Bank and said the lender has strong growth prospects over the next several years, “especially in areas in which we have significant market share and have chosen to scale up.”
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RBL Bank’s net profit more than doubled in the third quarter of the fiscal year to ₹147.06 crore as against ₹69.95 crore in the same period last fiscal.
For the quarter ended December 31, 2020, its net interest income fell by two per cent to ₹908 crore against ₹923 crore a year ago.
Net interest margin also fell to 4.19 per cent at the end of the third quarter this fiscal from 4.57 per cent a year ago.
Other income surged by 19 per cent to ₹580 crore in the October to December 2020 quarter versus ₹487 crore a year ago.
“Our capital and liquidity levels continue to be robust. It has been heartening to see the growth in the deposit franchise and we continue to grow granular deposits and reducing our funding and operating costs this financial year, making us more competitive as an institution,” said Vishwavir Ahuja, Managing Director and CEO, RBL Bank.
Provisions fell by two per cent to ₹609.76 crore in the third quarter this fiscal from ₹622.84 crore a year ago.
Gross non-performing assets eased to ₹1,050.21 crore or 1.84 per cent as on December 31, 2020 as against 3.33 per cent a year ago. Net NPAs stood at 0.71 per cent of net advances at the end of the third quarter this fiscal from 2.07 per cent a year ago.
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Taking cues from the systematic investment plans (SIPs) of mutual funds, Bajaj Finance launched a new FD product earlier this year — the Systematic Deposit Plan (SDP).
We reviewed the product in January this year (tinyurl.com/SDPBaj). Bajaj Finance has now launched a variant of SDP, with a ‘Single Maturity’ option.
We take a look at whether this new feature makes the cut as a worthy investment.
The SDP essentially allows a person to make regular investments, a minimum of ₹5,000 every month. Each monthly investment is treated as a separate deposit, with tenures of each deposit being 12-60 months, at the choice of the investor. In addition, investors can opt for the number of monthly deposits, ranging from six to 48.
All deposits under SDP are cumulative deposits, implying that the interest will be paid on maturity only. The SDP essentially helps create a laddering effect due to different FDs under SDP maturing on different dates.
The change is that this product introduced in January is now called ‘Monthly Maturity Scheme’. Alongside,the company has launched a new variant, the ‘Single Maturity Scheme’. Here, customers will receive the maturity proceeds of all the FDs created systematically, as a lump sum, in a single day. Under the Single Maturity Scheme, one can deposit for tenures between 24 and 60 months. The number of deposits (beyond the first deposit) one can opt for varies from six additional deposits to 36, depending on the tenure.
Customers opting for a tenure of 24 months (minimum tenure under Single Maturity Scheme) will be required to make six additional deposits under the SDP (after the initial deposit). For SDP of higher tenure, say, 36 months, customers can opt to pay either six or 12 additional deposits. Similarly, for a 48-month tenure, one can opt to pay six, 12 or 24 additional deposits, and for a 60-month tenure, the options available are six, 12, 24 or 36 additional deposits.
The tenure of each deposit (instalment), after the first deposit, will gradually reduce such that all of them mature on a single date. Say, you opt for a single maturity scheme of 36-month tenure and opt for six additional deposits — your first deposit will have a maturity of 36 months. The second deposit will mature in 35 months, and third/fourth/fifth/sixth/seventh deposit will mature in 34/33/32/31/30 months, respectively.
Under this scheme, every deposit will fetch interest, according to the prevailing rate of interest on the date of deposit and for the respective tenure.
Post the recent revision in rates, Bajaj Finance offers interest rates of 6.9-7.1 per cent for (cumulative) deposits ranging 12-60 months.
Customers who apply online and senior citizens get an additional interest rate of 0.1 per cent and 0.25 per cent, respectively. The company’s deposits are rated AAA.
While the rates offered by Bajaj Finance are higher than most public sector banks, a few private banks —IndusInd Bank and RBL Bank, for instance — offer rates that are 10-15 basis points (bps) higher than those offered by Bajaj Finance currently. Small finance banks offer 10-25 bps higher rates, across tenures.
That said, investing in SDP, whether single maturity or multiple maturities, may make sense only in a rising-rate scenario.
If the company revises its interest rates at regular intervals, successive instalments will be locked into higher rates.
However, if you want to maximise the interest earned, deciding the number of systematic deposits and the tenure of the instalments beforehand can be a difficult task.
The new variant of SDP — single maturity scheme — can be somewhat similar to a recurring deposit (RD). But the difference is that in an RD the interest rate is constant throughout the tenure (flexi RDs may pay out higher interest on the stepped-up amount). Also, in an RD, you are required to contribute every successive month.
Under the single maturity scheme, you don’t contribute for all the months of the tenure. You can choose the number of months you want to contribute.
In a traditional RD, banks generally charge a penalty —in the form of lowered interest rate —in the event of a delay in or non-payment of an instalment.
No such penalty applies in the case of the SDP. Delaying a month’s SDP instalment only alters the tenure of that deposit (in the case of single maturity scheme) or pushes your maturity date for that instalment further (monthly maturity scheme).
You also have the flexibility to stop investing or restart after a gap with a new ECS (electronic clearing service) mandate.
If you have a steady cash inflow which you wish to keep reinvested, this product could be an option apart from RDs.
Otherwise, it is suitable for those who cannot keep a regular watch on interest rates in the market and the rates offered by different entities.
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