As part of the largest foreign direct investment (FDI) in the Indian financial services sector, the Board of Directors of Emirates NBD Bank and India’s RBL Bank Ltd approved entering into definitive agreements for ENBD to acquire controlling stake in RBL Bank through a primary infusion of ₹26,850 crore ($3 billion).
The decision took place at the two banks’ respective meetings on Saturday, and is expected to close by June next year, once the regulatory and government approvals are secured, a top official said on Sunday.
However, the arrangement, which will merge RBL Bank with NBD’s wholly-owned subsidiary operating in India to become a “listed foreign bank subsidiary”, has not gone down well with the RBL Bank’s employees.
The private sector bank’s Employees Union has protested the takeover of the bank by UAE’s public sector lender, saying it was an onslaught by international finance capital.
“In recent years, we have witnessed a concerning trend of increasing foreign control over Indian banks. It began with Laxmi Vilas Bank, acquired by Singapore-based DBS Group. This was followed by the acquisition of Catholic Syrian Bank by the Canadian firm, Fairfax.
More recently, Yes Bank is seeing a growing stake being taken over by Japan’s Sumitomo Mitsui Banking Corporation (SMBC), and now RBL Bank is to be acquired by UAE’s public sector lender, Emirates NBD,” said Devidas Tuljapurkar, Chairman, RBL Bank Employees Union.
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The chairman of the employees’ union said this foreign presence in the Indian banking is “nothing short of an onslaught by international finance capital”, adding that “it is ironic that such takeovers are happening under a government that often champions the cause of Atmanirbhar Bharat (self-reliant India) and Swadeshi goods and values”.
“Despite its rhetoric, the government seems to be facilitating this steady encroachment,” he said.
Tuljapurkar reasoned that since the banking sector is “the very backbone of a nation’s economic infrastructure”, such a move that allows critical banking institutions to fall into the hands of foreign entities “could severely undermine the country’s ability to independently manage its economic policy, especially in times of global uncertainty”.
“India’s independence is not merely a political concept; it must also extend to economic and financial domains. Preserving the integrity and autonomy of our banking sector is essential to defending that independence. It is imperative that we reconsider the direction in which we are headed before it becomes too late to reverse course,” he stated.
The RBL Bank, meanwhile, said in a statement that the infusion will significantly strengthen RBL Bank’s balance sheet, enhance its Tier-1 capital ratio, and provide long-term growth capital, further enabling the Bank to deepen its deposit franchise and expand its footprint through calibrated branch network expansion.
Shayne Nelson, Group CEO of Emirates NBD, said the investment in RBL Bank is a “testament to our confidence in India’s vibrant and expanding economy.
“This strategic alignment brings together RBL Bank’s growing domestic franchise with Emirates NBD’s regional reach and financial expertise, creating a unique platform for growth and innovation,” he said.
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