Business & Economy

Merger of Lakshmi Vilas Bank with DBS Bank India.

Merger of Lakshmi Vilas Bank with DBS Bank India.

Lakshmi Vilas Bank Limited was established in the year 1926 in Karur of Tamilnadu. It was a private sector bank in India with 566 branches in around 19states and a union territory.

Recently, Lakshmi Vilas Bank was placed under a one-month moratorium and also a draft scheme for amalgamation with DBS Bank India was placed by RBI in order to protect the safety of the financial system. An announcement was made by Ministry of Finance to impose  moratorium on private lender until 16th of next month (December 2020) during which the bank cannot make payments that exceeds 25000. The announcement had created fear in  the minds of depositors but, RBI gave assurance for safety of depositors money and interest.

According to RBI’s statement, Chennai-based Lakshmi Vilas Bank with around 563 branches network and deposits worth Rs. 20973 crores, has faced steady decline incurring losses from last three years continuously that eroded the net- worth of the bank. In the September quarter of the FY21 bank posted a net loss of Rs.397 crores against a estimated loss of Rs.112 crores incurred in the June quarter. As per the reports, around one fourth of its advances has turned in to bad assets and the bank’s gross non-performing assets (NPAs) estimated at 25.4% of its advances as of June 2020.

After, Union Cabinet’s approval to the proposal to amalgamate LVB with DBS Bank in India on 25th of November (Wednesday), RBI stated that the amalgamation of both Lakshmi Vilas Bank and DBS Bank India will take place on 27th November. Soon after that the moratorium imposed will be removed and with the effect  all the branches of Lakshmi Vilas Bank Ltd will function as DBS Bank India Ltd’s branches. It also said that after the merger of banks, customers of Lakshmi Vilas Bank will operate as the customers of DBS Bank in India.

Manoharan, the RBI-appointed administrator said that the DBS Bank will be taking over LVB’s obligations along with its bonds last week. Hence, an unexpected surprising announcement was made. On 26th November 2020 (Thursday) RBI stated about writing off the Tier 2 bonds of Lakshmi Vilas Bank Ltd worth 3.18 billion rupees as DBS Group Holdings Ltd.

Related posts

Mauritius Revokes Licenses of Adani-Linked Fund Amid Money Laundering Probe

Aishwarya

Mahadev Betting App Case- Claimed Payment of ₹508 Crore to Chhattisgarh CM, Bhupesh Baghel .

Ruchitha B.C

BPL to re-enter the electronics market through partnership with Reliance. 

Vasantha M