Mumbai: Emirates NBD, the UAE’s second-largest bank, is reportedly looking to acquire a controlling stake in Mumbai-based RBL Bank, with an investment of up to $3 billion for a controlling stake, as per various news reports. This development comes five months after the company considered buying a controlling stake in Yes Bank but lost out to Japan-based SMBC.
Earlier known as Ratnakar Bank, RBL’s shares have been on fire lately, with the stock surging almost 40% in a year, outperforming the larger NIFTY Bank index by 10%. The mid-sized bank currently has three-quarters of its 562 branches located in urban areas, with its Return on Equity (RoE) being at 4.73%, trailing behind top-tier banks, but attractive due to its high net interest margin at 5.43%, higher than its rivals. The bank’s market capitalization is far smaller at Rs.17,886 crore, far smaller than Yes Bank at Rs.73,882 cr. As per reports, Emirates NBD aims to supplement RBL’s expansion pan-India, while helping it enhance its cross-border financing and non-resident banking operations. The Dubai-based bank currently has just a token presence in India, with three branches located in Mumbai, Delhi and Chennai. After the transaction, the bank aims to merge its existing operations with RBL Bank, something that hasn’t been done before in India.
For international investors, India’s banking industry has been a great investment opportunity, with deposit growth rising about 10-11% year on year, and total bank credit expanding to about 10.8% CAGR. The RBI has, until now, kept international investors away from India’s banks, allowing just 15% stake in local banks. For Yes Bank, the RBI made an exception, allowing SMBC to acquire a controlling stake in the bank, which now stands at 24.22%. According to unnamed sources in the know, Emirates NBD is looking to buy anywhere north of 25% of the bank, with no controlling promoter, making it fairly easy for the bank to achieve this.
However, the promoters cannot have more than 26% of the voting rights as per the current norms, restricting Emirates from buying beyond that threshold. All eyes are now on RBL Bank’s upcoming board meeting on October 18, where the company will approve the audited financial reports for September 2025. Till then, investors will be hoping for windfall gains if the deal goes through.
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