Tag: ratnakarbank

(Disclaimer:I am market marking in Ratnakar Bank)

For 27 long years, a day at Bank of America (BankAm) India began with Vishwavir Ahuja, Vish to many, calling on the who’s who of the India Inc rolodex. So, it came as quite a shock when he quit as BankAm India CEO in July 2009 to move to the Kolhapur-based Ratnakar Bank, catering to the hinterland of Maharashtra, Karnataka and Goa.

“I wanted to do something that would keep me busy beyond retirement age, and help me leave behind a legacy,” says Ahuja. His bet: Ratnakar Bank could move into a higher orbit with the right mix of brains and capital. But the ‘old’ private bank, set up in 1943, had its own concerns, and Reserve Bank of India had appointed two board directors to keep a watch on its affairs. Besides, both Indiabulls and Kotak Mahindra Bank were eyeing Ratnakar Bank.

But in just three years, Ahuja and his team have delivered. From being a relatively unknown entity, it has gone on to become the Fastest Growing Small Bank in the BW | Businessworld Best Banks Survey 2013. Advances increased 54.30 per cent to Rs 6,376.21 crore in end-March 2013; deposits 75.99 per cent to Rs 8,340.52 crore.

After the new team came on board, advances grew at a compound annual growth rate of 76 per cent (it was Rs 1,170 crore in FY10) and deposits at 74 per cent (Rs 1,585 crore). Net profit in end-March 2013 rose by 29 per cent. “This growth in net profit is significant as it is against a backdrop of increasing investments in technology, branches and infrastructure,” points out Ahuja. The ramp-up from FY10 saw employee strength rise to 1,900 (from 700), branches to 130 (from 89), ATMs to 184 (from 13) and clients to 450,000 (from 300,000).

By end-2015, these numbers should read: 3,300 employees, 225 branches, 500 ATMs and 900,000 clients. It’s in such a scenario, where a bank management’s attention is stretched to the limit, that dud loans raise their head. At Ratnakar Bank, gross non-performing assets (NPA) were at 0.8 per cent with the net NPAs at 0.4 per cent.

Ratnakar Bank will float its maiden public issue of shares in mid-2015, to raise Rs 700 crore. As for Ahuja, he will soon be the MD and CEO of the rebranded RBL Bank. The French firm, Penn Schoen Berland, is advising it, and McCann is taking care of the communications.

All of this has led to whispers that Ahuja and his A-team may soon get calls from a few big banks — and those lucky enough to bag a new private bank licence. –from BusinessWorld

Disclaimer:I am market making in Ratnakar Bank

Ahuja then set about convincing investors to commit capital to the bank. “It was a mission for the first six months. We couldn’t give investors a single piece of paper. It was me and my team’s personal credentials which were presented to the investors,” said Ahuja. The bank raisedRs720 crore in two phases in 2010 and 2013.Investors included marquee names such as HDFC, Samara Capital, Norwest Venture Partners, Gaja Capital Partners and International Finance Corp., the World Bank arm that drives private sector investment in developing markets. Faering Capital, co-promoted by Aditya Parekh, son of HDFC chairman Deepak Parekh, also holds a stake. Institutional investors now have a 50% holding. The bank has also given stock options to senior management and other employees.

IFC’s investment was made after eight months of due diligence. “Ratnakar Bank’s focus on growing their micro, small and medium enterprise segment in semi-urban and rural markets aligns with IFC’s India programme,” said senior investment officer Anup Kumar Agarwal

Now, at Ratnakar Bank, Ahuja’s mettle will be tested all over again as he puts the building blocks in place and scales up the business.

He’s not without his critics, who say he’s merely touching up the surface to make the bank look good for a potential investor. Ahuja flares up at such a suggestion. “We have not dressed up the bank to go anywhere,” he said. “We have done everything the hard way. We have not come in to make money by selling. I have made a long-term institution.”

Ahuja said Ratnakar Bank has put in place a clear road map to list by 2015. –from ET

Disclaimer:I am market making in Ratnakar Bank

Allowing foreign banks greater operational ground may both help protect the interests of depositors and fund capital projects in India. It may even bring about cost-effective banking backed by technology, thus increasing banking penetration.

While mergers and acquisitions may be some time away, smaller banks like IndusInd Bank, ING Vysya, Yes Bank, Dhanalakshmi Bank, Karnataka Bank and Ratnakar Bank — which are looking for capital to expand their footprint or scouting for investors — will see their valuations rise dramatically.

A senior official in a foreign bank said, “Asking banks to be wholly-owned subsidiaries and to get a letter of comfort from the parent is like creating a one-way street for the banks. RBI wants to ring-fence and a guarantee from parent banks. It will be good news to the smaller banks like Ratnakar, IndusInd and others of similar size that are looking for funds to expand.”-from DigitalFC