InvestorQ : Why has RBL Bank gone aggressive on raising large equity funds of late?
Juvina Maggie made post

Why has RBL Bank gone aggressive on raising large equity funds of late?

Deepa Salunkhe answered.
6 months ago

RBL Bank Limited, formerly Ratnakar Bank, has just completed its massive fund raising process. As part of its capital infusion, RBL Bank has garnered Rs.1566 crore through preferential allotment of shares. Baring Private Equity Asia invested Rs.999 crore and it will now hold 9.44% stake in RBI Bank going ahead.

There are other significant investors too in this private allotment by RBL Bank. ICICI Prudential Life Insurance has invested Rs.330 crore in RBL Bank while Gaja Capital has also infused Rs.150 crore. CDC Group invested Rs.86 crore in the current round.

This funding round was critical to boost its capital adequacy to more comfortable levels. Now RBL Bank’s capital adequacy stands tall at 18.7% with Tier-I standing at 17.4%, well above the statutory norm. This gives enough elbow room to expand the asset book of the bank.

RBL is still coming to grips with its NPA situation. Gross NPAs in the Sep-20 quarter rose to 3.34% in September from 2.61% last year. However, the provision coverage ratio or PCR improved to 74.75 per cent in September 2020 from 58.45 per cent a year ago. The higher capital adequacy means that it can expand its asset book without worrying too much about fluctuations in gross NPAs.