Lakshmi Vilas Bank Under Moratorium Till 16 Dec, to Merge with DBS

The RBI placed the bank under moratorium, capping deposit withdrawals at Rs 25,000 per month till 16 December.

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The Reserve Bank of India on Tuesday, 17 November, placed Lakshmi Vilas Bank under moratorium.
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The Reserve Bank of India (RBI) on Tuesday, 17 November, placed Lakshmi Vilas Bank under moratorium, capping withdrawals from the bank at Rs 25,000 per month till 16 December, NDTV reports. Soon after, the RBI also announced a draft scheme to merge the cash-strapped Lakshmi Vikas Bank Limited with the DBS Bank India Limited (DBIL), Hindustan Times reported.

CNBC TV-18 reported that the moratorium came into effect at 6 pm on Tuesday and was imposed on the basis of an application submitted by the RBI under Section 45 of BR Act.

Payments to creditors have also reportedly been capped at Rs 25,000 during the moratorium.

The report further said that the Central government had said that borrowers can withdraw above Rs 25,000 only for unforeseen expenses such as medical treatment, education, etc.

NDTV reported that in September 2020, the RBI had appointed a three-member committee to run the bank after shareholders voted out seven directors.

The RBI superseded the bank’s Board owing to a serious deterioration in the lender's financial position and TN Manoharan, a former Non-Executive Chairman of Canara Bank, has been appointed as the Administrator of the bank, IANS reported.

According to NDTV, the bank has been trying to find a buyer for the past one year.

Amalgamation Scheme for Lakshmi Vilas Bank

RBI said on Tuesday that the DBIL will bring in additional capital of Rs 2,500 crore upfront, to support the credit growth of the merged entity, according to MoneyControl.

In a statement, the apex bank said DBS Bank India has a healthy balance sheet, with strong capital support.

Owing to comfortable level of capital, the combined balance sheet of DBS Bank India would remain healthy after the proposed amalgamation, with CRAR at 12.51 per cent and CET-1 capital at 9.61 percent, without taking into account the infusion of additional capital, IANS reported.

The Reserve Bank has invited suggestions and objections, if any, from members, depositors and other creditors of transferor bank (LVB) and transferee bank DBS Bank India on the draft scheme, which may be sent to the address mentioned in the "Notice".

According to IANS, the draft scheme has also been sent to transferor bank and transferee bank for their suggestions and objections by 5 pm on 20 November.

(With inputs from NDTV, IANS, Hindustan Times, MoneyControl and CNBC-TV18.)

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