ICRA Limited has maintained RBL Bank 's long-term rating of ICRA AA- on Rating Watch with Positive Implications while enhancing the bank's certificates of deposit programme limit. This rating action follows the ongoing evaluation of Emirates NBD PJSC's (ENBD) proposed ₹26,853 crore investment to acquire a controlling stake in RBL Bank.

Rating Action Summary

ICRA has taken several rating actions on RBL Bank's various instruments:

Transaction Status and Regulatory Progress

The proposed ENBD transaction, announced in October 2025, involves a ₹26,853 crore investment through preferential issue to acquire a 60% controlling stake in RBL Bank. The transaction has received shareholder approval but remains subject to various statutory and regulatory approvals. Additionally, ENBD will make a mandatory open offer for up to 26% stake from public shareholders, and the transaction includes amalgamation of ENBD's Indian branches with RBL Bank.

Current Financial Performance

RBL Bank's financial metrics as of September 30, 2025, reflect a stable position:

Rating Rationale and Key Factors

ICRA's decision to maintain the rating watch reflects several factors. The rating agency acknowledges RBL Bank's comfortable capital position with adequate ratios, though profitability remains constrained by high credit provisions and operating costs. The bank's earnings profile has been impacted by increased slippages in unsecured retail loans, particularly credit cards and microfinance segments, leading to elevated credit costs of 1.30% (annualised) in H1 FY2026.

The substantial equity infusion from the proposed ENBD transaction is expected to support net interest margins and overall profitability. However, ICRA continues to monitor stress in unsecured segments due to worsening credit discipline and overleveraging concerns among borrowers.

Operational Efficiency and Future Outlook

RBL Bank's operational metrics show mixed trends. The bank's cost-to-income ratio remains elevated due to discretionary expenditure for customer franchise expansion and scaling up of in-house credit card collection teams. Operating costs as a percentage of average total assets stood at 4.80% in H1 FY2026.

The bank's deposit base has shown improvement with gradual increase in retail deposits, supporting its liquidity coverage ratio. However, the share of granular deposits (below ₹3 crore) remains relatively low at 51.00% of total deposits as of September 30, 2025.

Resolution Timeline

ICRA will continue monitoring the progress of regulatory approvals and ENBD's strategy for RBL Bank operations. The rating agency will resolve the rating watch upon completion of the transaction, with the substantial capital infusion expected to significantly enhance the bank's financial profile and operational capabilities.

RBL Bank management has disclosed important guidance regarding Expected Credit Loss (ECL) projections during a recent Citi conference. The bank's leadership indicated that the ECL effect is anticipated to range between 10-15% of the current net worth.

ECL Impact Assessment

The management's projection provides a quantitative framework for understanding the potential credit loss provisions. This guidance helps stakeholders assess the bank's risk exposure and provisioning requirements.

Strategic Implications

The ECL guidance reflects RBL Bank's approach to credit risk management and provisioning strategies. This disclosure demonstrates transparency in communicating potential financial impacts to investors and analysts.

The management's assessment during the Citi conference provides market participants with insights into RBL Bank's credit portfolio evaluation and risk mitigation measures. Such guidance helps in understanding the bank's preparedness for managing credit challenges and maintaining financial stability.