RBL Bank on Tuesday said it has seen withdrawals worth about 3% of its deposit base over the last one week by institutions and various state governments. It is engaging with these depositors to regain their business.
In a statement aimed at countering rumours about its health, RBL Bank said: “While there has been no material impact on our retail deposits, there have been some withdrawals from institutional depositors and a couple of state government organizations, constituting about 3% of our total deposits in the last one week. However, this issue is being addressed by us on a one-on-one basis with the state governments and also at the industry levels by RBI (Reserve Bank of India). In spite of this, we remain highly liquid with significant retail deposits, institutional lines, refinance, and surplus liquid assets.”
The bank stated that it is well-capitalised and has a capital adequacy ratio of 16.08% with tier-1 capital at 15.02% against the regulatory requirement of 11.5% and 9.5%, respectively. There has been no material adverse change in asset quality since the bank announced its financial results for Q3FY20 and its guidance remains consistent, even after taking into consideration RBL’s exposures to a south India-based client, understood to be Coffee Day Enterprises.
After private lender Yes Bank was brought under a moratorium on March 5 and withdrawals by depositors were capped, public faith in privately-owned lenders has taken a hit. Even some state governments have chosen to withdraw their deposits with private banks in the last one week. RBI officials are understood to have written to state governments to forbid them from making such withdrawals as that could be detrimental to the interests of financial stability.
In a bid to prevent a run on Yes Bank, RBI governor Shaktikanta Das on Tuesday reassured the bank’s depositors that there is no reason to pull out their money after the moratorium is lifted. He further pledged to extend it a line of liquidity support, if required.