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RBI placed LVB under 1-month moratorium & announced Draft Scheme to amalgamate LVB with DBIL

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Lakshmi Vilas Bank brought under moratorium new

On November 17, 2020, the Reserve Bank of India (RBI) proposed a draft scheme of amalgamation of the capital starved Lakshmi Vilas Bank Ltd. (LVB) with DBS Bank India Ltd. (DBIL). This decision has been taken after the Central Government has imposed a one-month moratorium on LVB on November 17, 2020 that temporarily capped withdrawals at Rs 25,000. The moratorium will be effective upto December 16, 2020.

  • The draft scheme invited suggestions and objections from members, depositors and other creditors of LVB and DBIL by November 20.
  • The Reserve Bank will take a final view thereafter.
  • LVB was imposed with 1 month moratorium under under Section 45 of the Banking Regulation Act, 1949.

T. N. Manoharan appointed as LVB Administrator

Apart from the above decision, RBI also superseded LVB’s board in order to protect the depositors’ interest due to deterioration in the bank’s financial position. In this regard, the apex bank appointed Thothala Narayanaswamy (T.N.) Manoharan, a former Non Executive Chairman of Canara Bank, as Administrator of LVB.

Point to be noted:

–The proposal of amalgamation of LVB with DBIL is taken as the latter is well capitalized and can infuse an additional capital of Rs 2,500 crore to support credit growth of the merged entity. Even after that the combined balance sheet of DBIL would remain healthy with Capital to Risk (Weighted) Assets Ratio (CRAR) at 12.51% and CET-1 capital at 9.61%.

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About DBS Bank India Ltd. (DBIL):

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, DBS Group Holdings Limited.

  • DBIL has been issued a banking license to operate as a banking company under Section 22 (1) of the Banking Regulation (BR) Act, 1949, on October 4, 2018.
  • As on June 30, 2020, its total Regulatory Capital was Rs 7,109 crore (against Capital of Rs 7,023 crore as on March 31, 2020).

Chief Executive Officer (CEO)– Piyush Gupta
Registered Office– New Delhi

About Lakshmi Vilas Bank (LVB):
Managing Director & Chief Executive Officer – Subramanian Sundar
Tagline – The Changing Face Of Prosperity
Head Quarter – Chennai, Tamil Nadu.