A hunger for growth capital and the need for it in larger tranches were the key advantages for the mid-sized RBL Bank as it signed a historic deal with Emirates NBD Bank. The transaction marks the largest-ever foreign direct investment in India’s financial sector and the first instance of a foreign bank acquiring majority ownership in an Indian bank.
Late Saturday, both the boards of RBL Bank and Emirates NBD Bank approved the agreements, through which the latter will make a primary infusion of near $3 billion (Rs 26,850 crore) into RBL to gain a controlling stake.
Dubai-based Emirates NBD currently operates in India as a foreign bank under the branch mode. It operates three branches in India, offering trade finance, treasury services, bilateral and syndicated loans, and assisting the needs of non-resident Indians (NRI). Once the entire deal is complete, RBL will become a subsidiary of the foreign bank.
Investors have been welcoming RBL’s operational efficiency and the news of a majority shareholder. The bank’s stock has risen near 90 percent in 2025, to Rs 299.7 at the BSE.
Advertisement
“Capital is the most important ingredient for growth for a financial institution. With the aspiration to grow multi-fold, it became far more important to look for capital in larger tranches, rather than smaller portions,” R Subramaniakumar, managing director and CEO of RBL, said on Sunday.
Read More
The deal will help RBL grow from a mid-sized bank to a future-ready financial institution, which can provide long-term value to shareholders. “We want to move to the league of the larger banks,” he said.
As of September, RBL, with an 80-year-old legacy, has advances of Rs 100,529 crore, deposits of Rs 116,667 crore and a total balance sheet size of Rs 153,998 crore.
Advertisement
RBL’s rival Yes Bank has also been in the news—led by a strategic foreign institution investment—with Japan’s Sumitomo Mitsui Banking Corporation (SMBC) having picked up a 24.22 percent stake in it in the September-ended quarter.
The deal and strategies for growth
The first step will be to get shareholders’ approval through a board meeting, set for November 12. Concurrently, it will seek regulatory and statutory approvals for a merger from the Reserve Bank of India, Securities and Exchange Board of India, the Clearing Corporation of India and others.
General view of Emirates NBD Bank in Dubai, United Arab Emirates. (Photo by Tom Dulat/Getty Images)
After all the approvals, there will be an open offer from Emirates NBD and, a fortnight later, the preferential issue will happen. The first tranche of money will come in the first 5-8 months, Subramaniakumar said.
To ensure a minimum public shareholding of 25 percent in RBL is maintained, the open offer and preferential issue sizes might need to be scaled down, the management said, depending on the demand to the open offer. Emirates could finally hold at least a controlling stake of 51 percent in RBL, and could also go up to 60-61 percent.
The RBL Bank top management explained that the new board will comprise 50 percent independent directors and 50 percent executive and non-executive directors, including CEO and other directors. The Emirates NBD Bank directors will form part of this segment, but Subramaniakumar declined to state how many seats the foreign bank will finally get.
Advertisement
As the capital comes into the RBL Bank, it will finalise plans for stronger corporate lending, remittances, deeper geographical distribution of products, digital banking services and wealth management offerings.
In recent years, RBL has focussed on granularisation of deposits, where deposits—a commercial bank’s funding source—come through several, small-value tranches rather than high-value. This strategy reduces concentration of risk. The bank has also been working towards a diversified lending portfolio, particularly lowering its dependency on unsecured lending and moving towards secured lending. In the past six quarters, RBL’s unsecured lending book has come down to 26 percent from 34. Subramaniakumar had disclosed earlier that the bank entered FY26 with zero NPA in the troubled microfinance sector.
In the September-ended quarter, RBL Bank reported a net profit of Rs 179 crore, while net interest income for the quarter grew 5 percent QoQ to Rs 1,551 crore; margins were also up 4.5 percent.
Life is not a template and neither is mine. Like several who have worked as journalists, I am a generalist in my over two decade experience across print, global news wires and dotcom firms. But there
