I believe the key difference between a great company and an average company is its management and leadership. We have many examples of great managements creating huge value for stakeholders and an equal number of examples of mediocre managements losing the plot.
RBL Bank is one such success story where a high quality management team has created immense shareholder value over the past five years and is also beautifully positioned to continue building this value for years to come. I would attribute many reasons for the bank’s success, but experienced and high quality management is the single-biggest factor behind its success story.
Since its inception in the 1940s, the bank had managed to grow its balance sheet size to only Rs.2,000 crore by 2010. But since it was taken over by a new management team, led by Vishwavir Ahuja, the Kolhapur-headquartered bank’s balance sheet has grown 20x to over Rs.41,000 crore (FY16) in just six years!
The bank has built a strong operating platform, enhanced its product offerings, increased its customer base multifold, launched a multi-channel distribution network and implemented a robust technology infrastructure. The foundation has already been laid and now a gradual execution of a well-thought through strategy will lead to the emergence of another great banking enterprise.
Credit growth in India has historically been 1.3x of the nominal GDP growth rate