RBL Bank Set to Join India’s Banking Big League with Emirates NBD Deal
RBL Bank Ltd. is all set to break into the big league of India’s financial sector after securing a $3 billion investment from Emirates NBD, according to the bank’s managing director and chief executive officer, R Subramaniakumar.
In an interview with NDTV Profit, Subramaniakumar stated that the bank does not want to be part of mid-sized banks and has multiple options to expand its balance sheet. He added that the deal reflects confidence not just in the growth story of RBL Bank, but also of India and its booming financial sector.
Emirates NBD to Acquire 60% Stake in RBL Bank
Dubai’s second-largest bank, Emirates NBD, will buy a 60% stake in the Indian private lender through a preferential allotment. This deal is expected to increase RBL Bank’s net worth to Rs 42,000 crore, making it one of the largest private sector banks in India.
Subramaniakumar explained that RBL Bank had two options: either go for an ‘in tranche’ deal where money will come in multiple portions or a frontloaded investment that provides a free runway for growth. The lender chose the latter, which will provide the bank with the necessary capital to expand its operations and increase its market share.
Regulatory Approvals and Timeline
The RBL Bank-Emirates NBD deal requires approval from the Reserve Bank of India, Securities Exchange Board of India, and Competition Commission of India. The bank will hold an extraordinary general meeting of shareholders on November 12 to seek their approval for the deal. The transaction is expected to be completed in the following five-six months, according to the CEO.
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Confidence in India’s Growth Story
Subramaniakumar stated that the deal reflects confidence not just in the growth story of RBL Bank, but also of India and its booming financial sector. He added that it is a great endorsement of the brand and the team, and the confidence on the board.
India allows 74% foreign investment in private banks, but limits shareholdings of any single foreign institution to 15% unless the regulator has approved. The current trend of regulations promotes growth, and this deal is expected to benefit from these regulations.
Impact on Indian Banking Sector
The RBL Bank-Emirates NBD deal is expected to have a significant impact on the Indian banking sector. It will increase competition among private sector banks and provide more options for customers. The deal will also provide a boost to the Indian economy, as it will increase foreign investment in the country.
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Conclusion
In conclusion, the RBL Bank-Emirates NBD deal is a significant development in the Indian banking sector. It will increase competition among private sector banks, provide more options for customers, and provide a boost to the Indian economy. The deal is expected to be completed in the following five-six months, and it will be interesting to see how it unfolds.
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