The Bombay High Court, on Thursday, 26 November, refused to stay merger of Lakshmi Vilas Bank with DBS Bank India, reported PTI.
This development comes a day after the Union Cabinet, on Wednesday, 25 November, approved Scheme of Amalgamation of Lakshmi Vilas Bank with Development Bank India Ltd (DBIL), reported ANI, citing Union Minister Prakash Javadekar.
DBIL is a private bank.
Javadekar, according to ANI, said:
“Union Cabinet approves Scheme of Amalgamation of Lakshmi Vilas Bank with Development Bank India Ltd (DBIL), a private bank. With this, there will no further restrictions on the depositors regarding the withdrawal of their deposits.”
The merger with DBS Bank will be effective from 27 November, reported PTI.
According to Mint, as part of the amalgamation, DBIL is set to infuse fresh capital of ₹2,500 crore into LVB.
Background
On Tuesday, 17 November, the RBI imposed a month-long moratorium on the Lakshmi Vilas Bank (LVB), capping off withdrawal limit for depositors at Rs 25,000 per month. The cash strapped LVB is the latest in line of a series of banks such as Punjab and Maharashtra Cooperative Bank (PMC) and Yes Bank, to go under, leaving thousands of depositors helpless.
The RBI has superseded the board of directors of LVB for 30 days and appointed TN Manoharan, the former Non-Executive Chairman of Canara Bank as Administrator.
“There have been some governance issues in Lakshmi Vilas Bank and that is one of the reasons why the RBI had to step in and take control of the situation,” said TM Manoharan in a conference call on Wednesday, 18 November.
Further Manoharan, according to BloombergQuint, said:
“Our priority is to protect the interest of depositors and revitalise the bank through amalgamation.”
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