Gaja Capital has made two investments in RBL Bank: the first in 2010, supporting a management buyout; and the second in August as part of a private equity consortium that injected INR15.6 billion ($209 million) to boost the Indian lender’s capital adequacy ratio. The significance of the timing – one during the fallout from the global financial crisis, the other amidst the COVID-19 pandemic – is not lost on Gopal Jain, Gaja’s founding managing partner.

After the global financial crisis, public sector banks were preoccupied with a government-mandated credit boom that ultimately led to a non-performing loan (NPL) problem. They lost sight of the emerging consumer lending opportunity, leaving the door open for private sector players like RBL.

Public sector banks used to dominate the industry by market share and market capitalization. While still responsible for two-thirds of banking activity, their combined market cap – excluding State Bank of India – is now less than 10%, a reflection of where investors see value and incremental growth. Jain believes this shift in momentum from public sector to private sector could receive another turbo-charge courtesy of COVID-19. This time the onus is on reach and digitization.