Private sector lender RBL Bank Ltd said on Thursday it would raise some 1,566 crores through a preferential
allocation of shares to a group of investors led by Baring Private Equity Asia, providing the bank with
the much-needed capital to cope with the repercussions of the COVID-19 crisis, which has severely
affected many borrowers’ loan repayment capabilities.
Baring PE Asia will invest ₹1,000 crores for a 9.45% stake in the bank, making it the biggest shareholder in RBL Bank. Others who took part in the round include ICICI Prudential Life Insurance Co. Ltd, which will take a 3.13% stake with an investment of ₹330.5 crores, and private equity firm Gaja Capital, which is investing ₹150 crores for a 1.42% stake. The UK’s development finance institution CDC Group will also be investing ₹86.5 crores in this round. CDC already holds a 5.5% stake in the bank.
Shares will be allotted to these investors at a price of ₹177 per share. On Thursday, RBL’s shares closed trading at ₹182.1 apiece, down 1.43% on the BSE.
The funding will increase the bank’s capital adequacy ratio to 18.6%, it said, giving it headroom to tackle the impact of the COVID-19 pandemic.
This is the second time in less than a year that RBL Bank has raised equity capital, highlighting the pressure on its balance sheet in the wake of the pandemic. In December, the lender had raised ₹2,701 crores.
The bank’s shares have so far this year underperformed Bankex’s banking sector index. RBL shares are trading down 47.19 percent year-to-date, while the Bankex is down 31.94 percent. Earlier this year, after the troubles at Yes Bank Ltd, the lender witnessed a decline in its deposit base, which raised doubts about the health of many mid-size banks.
Following the Yes Bank episode, some institutional depositors and state government entities withdrew 3% of RBL Bank’s deposits. The lender also saw its loan book shrink. For the quarter ended 30 June, the bank reported a 2% sequential drop in net advances to ₹56,683 crores.
It reported a 47% decline in its June quarter net profit to ₹141 crores on the back of higher provisions and lower other income. The bank’s total provisions more than doubled year-on-year to ₹500 crores in Q1.
It has set aside ₹240 crores for COVID-19 provisions, taking total provisions to ₹350 crores, in the six months to June. The bank said 13.7% of its loan book was under moratorium as on 30 June, compared to 33% earlier. The drop was led by wholesale loans where 5% of the loans are under moratorium as compared to 22% earlier.