CDC, the UK’s development finance institution, has today announced it is providing a US$50m long-term loan to RBL Bank in India.
The provision of the tier-II debt will support the RBL’s strong growth into new regions of India and its focus on financial inclusion, agribusiness financing and lending to SMEs, while at the same time strengthen the capital base of the bank.
RBL Bank— one of the country’s fastest growing private sectors banks — is an existing CDC investee company having received a US$28m equity investment in March 2014 and subsequent pre-IPO investment of US$7m in October 2015. CDC has supported the bank’s strong growth as it developed from a regional bank to a wider network of 201 branches and 373 ATMs across 16 Indian states and Union Territories serving over 2 million customers.
Founded in 1943, RBL Bank was traditionally concentrated in Maharashtra, Karnataka and Goa. In 2010, however, a new management team was brought in to pursue a strategy to expand beyond the bank’s western India roots. Today, RBL Bank’s total business size is US$6.88 Billion as of March 31, 2016 and it employs close to 3900 people. RBL has been creating over 400 banking jobs each year from 2012 to 2016 and has the potential to generate jobs and livelihoods indirectly for an estimated 330,000 people over the next five years by expanding its loan book.
“Though the debt market in the Indian financial sector is well developed, the market for tier-II capital is weak. Our support will enable RBL Bank to reach more customers, provide more jobs, and boost the level of financing available to SMEs and agribusiness in the country,” CDC Managing Director Holger Rothenbusch said. “This investment in long term Tier II debentures of RBL is being made on the back of the close relationship we have with RBL, the strong performance shown by the bank over the last couple of years, and the continued development impact we see from RBL’s ability to reach a large number of Indians who were previously excluded from financial services.”
RBL Bank’s Managing Director and CEO Vishwavir Ahuja said, “This private placement of Basel III compliant Tier II debentures is testimony to the trust that CDC Group has in our capability to deliver highly-skilled and technology-driven services in the Indian banking and financial services industry. It is also a reaffirmation of the close and long-term relationship we share with CDC. The investment will support the Bank’s strong growth especially in its AgriBanking and Financial Inclusion business engines and help to further strengthen its capital adequacy ratio under Basel III guidelines. We will continue to invest significantly in building a strong banking platform that will encompass technology, human resource, network, risk management and regulatory compliance.”
