Earlier in the session, RBL's shares tanked nearly 25% after the company's top boss went on medical leave and the country's central bank named an additional director to the company's board over the weekend.

RBL said on Saturday the central bank appointed Yogesh Dayal, chief general manager at RBI, as an additional director for two years.

RBI in a statement clarified additional director appointment in private banks is undertaken as permitted under the Banking Regulation Act as and when it is felt that the board needs closer support in regulatory and supervisory matters.

"There is no need for depositors and other stakeholders to react to the speculative reports. The bank's financial health remains stable," RBI said.

RBL's board accepted a request from Vishwavir Ahuja, managing director and chief executive officer, to proceed on medical leave with immediate effect, the company said on Saturday.

The bank named Rajeev Ahuja as interim managing director and CEO. In a press call on Sunday evening, Rajeev attempted to allay concerns about the management changes and said the bank's business fundamentals were intact with scope for "tremendous improvement".

RBL's shares, however, dropped as much as 24.7% to 130.20 rupees on Monday, its lowest since June 2020.

In the past the country's central bank has named its officials on boards of banks where there might have been poor financials or governance concerns. However, RBL reiterated that business was as usual and it did not have any near term capital needs.

Given the circumstances under which RBI initiated such an action in the past, there will be clarity required not only on management succession, but fundamental performance and strategy of the bank, analysts at ICICI Securities said.

RBI said that RBL's liquidity coverage ratio is 153% as on Dec. 24, versus regulatory requirement of 100%, and the bank has a "comfortable" capital adequacy ratio of 16.33%.

ICICI Securities downgraded RBL's stock to "sell" and cut its price target to 130 rupees from 181 rupees.

In order to comfort investors, more explanation will be required from management to justify the sudden exit of Vishwavir Ahuja nearly six months before his term ends, Emkay Global Financial Services said.

(Editing by Shounak Dasgupta)

By Chandini Monnappa and Swati Bhat