Just posting my view here as a RBL bank customer and through some scuttlebutt in the last few days:-
1. Why did I use RBL Bank in the first place?
- This was a 3rd bank account for me, after a leading PSU and a leading private bank. It was used more ‘tactically’ - if I might put it like that. The main uses of this were:-
a. Great interest rates for Savings accounts as well as for FDs for the longest time - I regularly went ahead with FDs at over 8% interest rates and savings rates above 10 L holdings in the bank were at 6.75% at one point of time, which was very lucrative. These guaranteed results from positions not yet invested into the markets were a great replacement for liquid funds/debt funds - which had lower/similar returns - and there was the advantage of no fund management expense here. I used the banks services for this extensively for a few years till March 2020. Once the environment worsened because of COVID, I stopped using these and moved most funds into my main banks/increasing investments in the market - as per whatever fit in the financial plan.
b. Excellent services at least for Insignia customers including very cheap ‘benefits’. Supplementary services offered by the bank were almost free/very cheap for any other services I needed from time to time. They have still maintained this relationship, despite us reducing our exposure to the bank by almost 100% in the last 6 months.
c. Great staff and service experience - everyone at the branch was great and very helpful with everything, so very good experience for my father who would still use it for cash withdrawals etc. Overall our experience with the bank was fantastic.
Now what happened for us:-
a. With COVID, we did not want any exposure to the smaller banks in terms of a banking relationship - we took away most of our relationship in March/April 2020 itself. The bank has still been very good in service after that.
b. Whatever small limited amounts I had left (maybe to maintain an interested relationship as such), I transferred it to my other leading private sector bank this week. Bottom line is, as an investor and a customer, the security of funds is the most important thing. I don’t want to increase my risk by backing the bank through this, even if I may be perfectly happy with everything.
How has my experience been in the past week with the bank:-
a. Again an A+ to the bank for this. The experience, despite taking away all our relationship balances, has been fantastic.
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The branch was fully occupied earlier this week with staff present for everything. Everyone from the branch manager to the front line staff were extremely helpful. Their opinion was that everything is fine and this is precautionary, but I did not base my decision on this, as I believe they would hope rather than know everything is fine and I don’t think the employees would be exposed to any of the stuff happening at the top level.
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The staff usually have had and continued to have a high opinion about their top management. They were disappointed, maybe felt let down. This was really tough for them, and I feel deeply sad for a wide range of employees who work very hard day in and day out, and then have to deal with these unfortunate situations when they might be worried about their own jobs. I do hope, even if only for the employees sake, that whatever the RBI does guarantees their jobs and livelihood. From here on, I would also understand if the RBI had the perspective that the most important thing is the security of small deposit holders who are not as informed and bank employees.
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I needed to speak to customer care for some work related to withdrawals. Everything is still functioning very efficiently and smoothly (atleast the Insignia line), and it was all done in the stipulated time without any hassle.
How could extrapolation of this translate to the banks future:-
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I believe know one can know, even currently, how the future plays out, simply because it is not possible to predict behaviour of the banks customers and if they choose to be sticky through this. I did not see any sense in it, but it would depend on so many factors for different accounts. Like a member mentioned earlier - trust is the key aspect here. That is pretty impossible to judge.
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Even if capital adequacy seems fine currently, it would eventually depend on how things turn out from now. How the RBI and the bank manage this would be critical in the future of the bank. Media management. PR etc will be critical - they cant afford panic at any of their branches
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From a customer standpoint, once the storm blows away, I would be very happy to take my relationship back to them, but only if and when I am very sure all is okay (however much time it takes) and their reward/service levels continue. Even if I extrapolate other people have a similar experience, if they manage to tide over this storm the future might not be bleak. But the question is if they can tide over this?
Disclosure : Not invested, no transactions in the stock in the last 30 days. This is not investment advice and I am not a registered advisor. These are just my personal views encompassing experience as a customer and some scuttlebutt.