BLOG
RBI announcement triggers steep decline in RBL bank share
What’s Buzzing:
RBL Bank witnessed a steep fall price of ~18%, post RBI's appointment of Yogesh K Dayal, as an additional director on board of RBL Bank and board acceptance of Vishwavir Ahuja’s (current MD & CEO) leave request for six months.
Context:
RBI had earlier approved appointment of Vishwavir Ahuja as MD & CEO for RBL Bank for one year with effect from June 30, 2021. Hence, with six months remaining for completion of tenure of the current MD & CEO, such a development came as a surprise for investors. In the meanwhile, Rajeev Ahuja (currently Executive Director) has been appointed as interim MD & CEO to ensure the smooth functioning of the bank.
Our Perspective:
Historically, such action initiated by the RBI hinted at concerns regarding compliance, asset quality, governance or business risk. Thus, repercussions in the form of derailment of confidence among various stakeholders was imminent. Consequently, RBL Bank's stock price witnessed a steep decline. Although the management highlighted that such actions are not a reflection of fundamental concerns and maintained guidance of progression towards RoA of 1% by Q4FY22, it was not enough to address market concerns with the stock price remaining under pressure. Post RBI’s statement, it looks like limited progress on succession planning could be one of the reasons triggering RBI’s move. Further, RBI’s statement regarding satisfactory financial position of the bank allayed investor and depositor fears and will help to bridge the trust deficit and regain confidence of stakeholders.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
Related content
Blogs
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Video
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.