One of the challenges that RBL Bank’s interim CEO Rajeev Ahuja faces is to instill confidence among retail depositors about the private lender’s financial health. In the October-December quarter, the bank’s retail deposits and deposits for small business customers plunged 11.3% to Rs 27,871 crore.

Current and savings account deposits (CASA) fell to Rs 25,316 crore, down 5.3% over the previous quarter. The CASA ratio was lower at 37.8% compared with 41.6% a quarter ago.

Overall, deposits were at Rs 73,637 crore, down 2.58% quarter-on-quarter. This was the quarter prior to the turn of dramatic events that unfolded around Christmas time when RBL Bank’s longtime CEO Vishwavir Ahuja left abruptly and the Reserve Bank of India (RBI) appointed an administrator, Yogesh Dayal, on the private lender’s board. The RBI also stated later that the financial health of RBL Bank is healthy.

The quarter running through March 2022 will be of significance as it will show whether the depositors have decided to stay loyal to the bank or have started fleeing after the new developments.  

According to provisional quarterly data released by the bank, the liquidity coverage ratio (LCR) was at 146% versus 155% as of September.

On Friday, RBL Bank said a committee has been appointed to select a new permanent CEO from within and outside the bank. 

Meanwhile, ICRA has put the bank’s rating on ‘watch with developing implications’. According to the rating agency, RBL Bank’s bulk deposits still constitute a relatively high share in its total deposits. “Accordingly, the bank’s ability to roll over deposits as well as demonstrate a reasonable degree of stability in its deposits base will remain critical for sustaining liquidity in the near term," ICRA said in a note dated 31 December.

RBL Bank’s excess liquidity has been expanding over the last 18-20 months, supported by the degrowth in advances. While advances were lower by 3%, deposits were higher by about 31%. The bank’s excess statutory liquidity ratio stood at Rs 12,000-17,000 crore during April-September 2021. "As a result, RBL has reported positive cumulative mismatches in all its near-term maturity buckets that are less than one year," ICRA said.

The bank’s higher statutory liquidity ratio (SLR) and LCR point to the bank's ability to withstand some degree of stress. The deposit base, however, will be critical for RBL’s future scale of operations and hence its profitability and internal capital generation, ICRA said.