{"id":184613,"date":"2023-12-11T06:39:17","date_gmt":"2023-12-11T06:39:17","guid":{"rendered":"https:\/\/precoinnews.com\/?p=184613"},"modified":"2023-12-11T06:39:17","modified_gmt":"2023-12-11T06:39:17","slug":"rbl-banks-business-trajectory-remains-intact","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/rbl-banks-business-trajectory-remains-intact\/","title":{"rendered":"RBL Bank’s business trajectory remains intact"},"content":{"rendered":"
‘We are committed to achieving the targets we had outlined.’<\/strong><\/p>\n The Reserve Bank of India’s recent decision to increase risk weights on unsecured loans does not necessitate any capital raise by RBL Bank, MD & CEO R Subramaniakumar<\/strong> tells Manojit Saha<\/strong>\/Business Standard<\/em> in a video interview.<\/p>\n What is the impact of higher risk weight on RBL Bank’s unsecured loans?<\/strong><\/p>\n Our bank had a total capital adequacy ratio of 17.07 per cent and Tier-I (entirely CET1) of 15.15 per cent as on September 30, 2023 (inclusive of profits for the half year).<\/p>\n The impact is about 65 basis points (bps) on the CET1 of the bank as on September 30, 2023, largely on account of credit cards.<\/p>\n This regulatory change has been under discussion for some time and is a step in the right direction by the regulator.<\/p>\n Our bank has been taking steps to accelerate growth in newer secured business segments such as housing, business loans, vehicles, and gold, all of which are lower risk weight products.<\/p>\n For example, housing averages a risk weight of 35-40 per cent, gold loans come with zero risk weight.<\/p>\n I want to reiterate that this circular does not necessitate any capital raise by the bank and we have sufficient capital levels for meeting our stated growth plans.<\/p>\n Our business trajectory remains intact and we are committed to achieving the targets we had outlined.<\/p>\n Does this mean that the bank will need to raise capital in the near future?<\/strong><\/p>\n We have sufficient capital and at this stage don’t envisage any need to raise fresh capital.<\/p>\n Our capital position remains well above our internal thresholds, as well as naturally, the regulatory minimum, which is at 11.5 per cent.<\/p>\n What are the key changes that you introduced after taking charge in June last year?<\/strong><\/p>\n I did not bring a plethora of people from outside who would have taken time to settle down.<\/p>\n The business would have been postponed by a couple of quarters, which I fast-forwarded by utilising the team within. That is the first decision I took.<\/p>\n The second one was that the bank already had around 500-plus branches, which were primarily looking at liability.<\/p>\n I just changed that. They’re no longer liabilities; they’re assets too.<\/p>\n That means the branches have also started looking at assets as a sales point.<\/p>\n So the branch is not a sales point for liability, but it is a sales point for assets, also.<\/p>\n That is a big change, which I brought in, which requires a lot of mindset change.<\/p>\n The third change was that when I said that the branches can be assets, we did not have a multiple asset product at all.<\/p>\n In the last six to nine months, we introduced multiple products.<\/p>\n Another important thing that I did was technology. The bank had already established a fairly robust technology, which is leveraged for launching all these products.<\/p>\n The results are in front of you. In Q2, all the new products grew by 30 per cent year-on-year (Y-o-Y). We are on track and in the correct direction, as planned.<\/p>\n What is the bank’s credit and deposit growth target for the current financial year?<\/strong><\/p>\n Our minimum growth will not be less than 20 per cent in advances. And we divide advances into three parts.<\/p>\n The wholesale banking will be more or less flattish. But within wholesale banking, it is commercial banking — which we call SME banking — that will grow between 15-17 per cent.<\/p>\n Last quarter, you would have seen around 17 per cent growth.<\/p>\n Entire retail put together will grow by around 30-35 per cent. And within that, the secure products will grow faster.<\/p>\n On deposits, we will grow between 18 and 20 per cent. We have achieved around 13 per cent in the last quarter.<\/p>\n In CASA, we grew by 12 per cent. We are working to maintain the same pace of growth in CASA also.<\/p>\n Feature Presentation: Aslam Hunani\/Rediff.com<\/em><\/strong><\/p>\n