Stock Alert! RBL Bank sinks are RBI puts nominee on board, what is the concern?

RBL Bank in the headlines with many twists and turns. From CEO leaving to the RBI appointing a board member to heavyweight Dalal Street veterans looking to buy a big stake. Here is what we know so far -:

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Change of guard

The bank communicated that RBL Bank’s long-term MD and CEO Vishwavir Ahuja, has gone on leave with immediate effect. Ahuja's term was ending in June as is as the RBI had rejected his term extension.

The RBI appointed an additional board member Yogesh Dayal to the the Mumbai based bank and the financial institution also announced it is elevating Executive Director Rajeev Ahuja as interim MD and CEO.

Why is the street concerned?

The move from RBI raised eyebrows as the appointment of an RBI nominee on a private sector bank board is a rarely invoked power and is especially done by the regulator to protect depositors.

In the past, where the RBI has put its people on the banks’ boards include Dhanlaxmi Bank, erstwhile Lakshmi Vilas Bank, and YES Bank. The common thread in all these cases was that there were governance concerns or troubled finances.

To calm investors, RBL Bank has informed the exchanges that business is as usual at the bank.

Buzz of the big bulls coming in

Adding masala to this feauture, Ace investors Rakesh Jhunjhunwala and D-Mart’s founder RK Damani have reportedly approached the Reserve Bank of India (RBI) to buy a 10 per cent stake in RBL Bank, according to a report by CNBC TV 18. According to the report, RBI is looking at the request.