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BW Businessworld

Hitting Pay Dirt

RBL has engaged with its clients in a remarkable way; the IPO was proof of it

Photo Credit : Umesh Goswami

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It was always spoken of as the bank to watch out for ever since Vishwavir Ahuja moved into the corner office at RBL eight years ago from Bank of America-Merrill Lynch. It was the first instance on our turf of a set of professional bankers moving into an old-private sector bank (of seventy years vintage in this case) to turn it around big time. Glimpses of what was in store had been evident for some time now — the bank had done a hat-trick in the ‘Fastest Growing Small-sized Bank’ class in the BW Businessworld Best Banks’ Survey in association with PwC. In the 10th edition of the survey, it has gone one better — it has won both the aforementioned award and shares the pole-position for the ‘Best Small-sized Bank’ with City Union Bank.

RBL’s net total income rose 51 per cent to Rs 1,977 crore; advances by 39 per cent to Rs 29,449 crore and deposits by 42 per cent to Rs 34,588 crore. Net-profit was up 53 per cent at Rs 446 crore. The cost-to-income ratio improved to 53.4 per cent (58.6 per cent); so too, the return-on-assets at 1.08 per cent (0.98 per cent).What’s remarkable is the bank’s return on equity perked to 11.67 per cent (11.32 per cent) in the year of its maiden public float of shares. Its debut on the bourses — the first by a private bank in a decade — was at Rs 274.20 per share, up 22 per cent from the issue price of Rs 225.

RBL In Context
What you can’t get away from is that despite all efforts to clean banks’ books and the new bankruptcy code, elevated corporate risks and dud-loans, especially in state-run banks remain. During fiscal ’17 gross non-performing assets (NPAs) rose to 1.20 per cent (0.98 per cent); the ratio of gross NPAs and standard restructured assets to gross advances to 1.27 per cent (1.06 per cent). Net-NPAs were at 0.64 per cent (0.59 per cent). But do read the numbers in the context of where the economy is at now, and you get the picture. More critical is that it places banks with good capital buffers in a particularly sweet spot; RBL is bang in its middle.

Says Ahuja: “We now straddle every part of the banking business. Under six business verticals namely: corporate and institutional, commercial, business (banking), agri-business and development (banking), financial inclusion, treasury and financial markets.”

But what is also to be borne in mind as Ahuja points out is the “expansion of the banking network itself, is in a sense taking banking out of the bank branch”. It’s a reference to the sprouting of small finance and payment banks, mobile-wallets, the Aadhaar payment bridge system, and Unified Payment Infrastructure (UPI) platform — all of which will reshape the financial services mart; you can’t play off the brick-and-mortar investments as in the past.

RBL is ready to play it smart with tomorrow’s world in mind; under the new terms of engagement. To illustrate: enabling customers to avail of credit instantly over their smartphones through its association with a fintech, Money Tap; work on niches like a forex card for the Diplomat segment and Titanium First Debit Card for India Startup Club on the MasterCard platform. You may ask what’s special about all this? Well, that’s the way you do it!

A short profile is not enough to do justice to the RBL narrative — a saga of a clutch of bankers who have crafted what they have, despite not having even remotely held a job in their past avatars that answers to their current calling. And have hit pay dirt!


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