RBL Bank shares tanked 20 percent to hit lower circuit on Monday as negative developments over the weekend and dull brokerage commentary weighed on investor sentiment.

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The stock hit its 52-week low of Rs 138 today. It has been falling for the last two sessions and is down over 22 percent during the period.

RBL Bank’s Vishawvir Ahuja has stepped down as Managing Director and Chief Executive Officer of the bank, and the lender has appointed Rajeev Ahuja as the interim MD and CEO with immediate effect.

The Reserve Bank of India has also appointed its Chief General Manager Yogesh K Dayal as an additional director on the board of RBL Bank.

CLSA said that the central bank appointing an additional director to RBL Bank's board is a surprise move and in the past, this action by the RBI has usually come when banks have been in trouble. This move will lead to uncertainty in the near term, said CLSA.

CLSA has trimmed its target price on the stock to Rs 200 from Rs 230.

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Meanwhile, ICICI Securities has downgraded its rating on the banking stock to 'sell', considering the looming uncertainty.

This interim adverse development can drag the bank's valuation to as low as 0.55 times FY23 book, the brokerage said, slashing its target price by about 28 percent to Rs 130.

Investec has placed its recommendation for RBL Bank 'under review' from 'buy' and will update post Q3 earnings. The recent development is clearly a negative outcome from the investor confidence perspective, the brokerage said.

Bank employee unions’ umbrella body AIBEA wrote a letter to Finance Minister Nirmala Sitharaman expressing concern that everything was not right at RBL Bank and it was going the Yes Bank and Lakshmi Vilas Bank way.

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"We are worried and concerned about the developments that are taking place in the affairs of RBL Bank Ltd, the Kolhapur-based private bank. The sequence of events leading to the sudden exit of Vishwavir Ahuja along with induction of Dayal from RBI on the board as an additional member indicates that everything is not ok with the bank,” AIBEA said in its letter to the Finance Minister.

However, Rajeev Ahuja said that "the recent developments are not on account of our financial performance. The bank has the support of the RBI".

Rumours about the bank’s financial health have been doing the rounds following Vishwawir Ahuja’s sudden exit.

Rajeev Ahuja declined to speculate on the reason for former MD and CEO Vishwawir Ahuja’s exit and said that the RBI is comfortable with the performance of the bank. He said he did not see any issues for the bank’s stakeholders, “now or later.”

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First Published:Dec 27, 2021 9:52 AM IST