New Delhi, Dec 27 (IANS): The RBL Bank management did not provide satisfactory reasons for the RBI's appointment of its official as an additional director on the bank's board and the sudden management rejig, according to a report by Emkay Global Financial Services.

It said that the RBI's long-term discomfort with the unsecured heavy asset-side construct (MFI plus cards at 31 per cent) creating asset quality risks as seen during the Covid-19 pandemic and poor compliance with its directives about risk management/governance/succession could have possibly led to its swift intervention, apart from ensuring a smooth management transition and comforting the stakeholders.

In a surprising turn of events, the RBI has appointed its chief general manager, Yogesh Dayal, as an additional director on RBL's board for two years; current MD & CEO Vishwavir Ahuja has gone on medical leave; and Executive Director Rajeev Ahuja has been elevated as interim MD & CEO for a smooth transition.

"We believe, in order to comfort investors, more explanation will be required from management to justify the sudden exit of Vishwavir Ahuja nearly six months before his term ends (June 2022) and the RBI's intervention (typically seen in weak banks like Ujjivan, Dhanlaxmi, LVB, J&K Bank)," said the Emkay Global Financial Services report.

"We believe the story will unfold in due course. That said, we draw some comfort from the appointment of Rajeev Ahuja (part of the turnaround journey) as interim MD & CEO, healthy liquidity buffers/capital ratios (Tier I at 15.5 per cent) and management's strategic intent to change the portfolio mix toward secured assets. However, near/medium-term business/asset quality dislocation is inevitable."

Management emphasised that the change in the top management/board is not due to any asset quality issues/divergence and that recovery trends are largely in line with expectations, barring in MFI.