Mumbai:
Afte putting the financially battered Lakshmi Vilas Bank under moratorium for 30 days,the Reserve Bank of India(RBI) has today placed in public domain a draft scheme of amalgamation LVB with Singaporean DBS Bank India Ltd. (DBIL), having its registered office at New Delhi.
T. N. Manoharan, former non executive chairman of Canara Bank has been appointed as the administrator of the Chennai based LVB, which was set up in 1926..
After taking into consideration deteriorating financial conditions of LVB , the RBI has come to the conclusion that in the absence of a credible revival plan, with a view to protect depositors’ interest and in the interest of financial and banking stability, there is no alternative but to apply to the Central Government for imposing a moratorium, said RBI.
The central bank has capped withdrawal from the bank at Rs 25,000 for one month.
DBIL is a wholly owned subsidiary of DBS Bank Ltd, Singapore (“DBS”), which in turn is a subsidiary of Asia’s leading financial services group, DBIL will bring in additional capital of ₹2500 crore upfront, to support credit growth of the merged entity.
Owing to comfortable level of capital, the combined balance sheet of DBIL would remain healthy after the proposed amalgamation, with CRAR at 12.51% and CET-1 capital at 9.61%, without taking into account the infusion of additional capital.
The RBI has invited suggestions and objections, if any, from members, depositors and other creditors of transferor bank (LVB) and transferee bank (DBIL), on the draft scheme, which may be sent to the address mentioned in the “Notice”. Th
The financial position of The Lakshmi Vilas Bank Ltd. (the bank) has undergone a steady decline with the bank incurring continuous losses over the last three years, eroding its net-worth. In absence of any viable strategic plan, declining advances and mounting non-performing assets (NPAs), the losses are expected to continue.
Further, the bank is also experiencing continuous withdrawal of deposits and low levels of liquidity. It has also experienced serious governance issues and practices in the recent years which have led to deterioration in its performance. The bank was placed under the Prompt Corrective Action (PCA) framework in September 2019 considering the breach of PCA thresholds as on March 31, 2019.