The depositors of Lakshmi Vilas Bank are in a real panic as the Reserve Bank of India imposed a 30-day moratorium on the bank. RBI also superseded the Board of directors and announced a draft scheme for the merger of the bank with DBS Bank India, a subsidiary of DBS of Singapore.
The moratorium will be effective up to December 16, 2020. It has also restricted withdrawals by depositors at Rs 25,000 from savings and current accounts, and expenditure on any item at Rs 50,000 per month.
RBI appointed administrator of Lakshmi Vilas Bank (LVB) T N Manoharan has said that the struggling lender has enough liquidity to pay back depositors. He assured that the depositors’ money is safe and expressed confidence of completing its merger with DBS Bank India within the deadline set by the central bank.
Addressing reporters, Manoharan said that Lakshmi Vilas Bank has Rs 20,000 crore in deposits and Rs 17,000 crore in advances. He said that his top priority is to assure depositors that their money is safe and that the bank has enough liquidity to pay back the depositors. RBI will issue the final merger draft on November 20.
The central bank said that the financial position of the Chennai-based lender, which has a network of 563 branches and deposits of Rs 20,973 crore, has undergone a steady decline with the bank incurring continuous losses over the last three years, eroding its net worth.
In its statement, the central bank said that DBS Bank India will bring in additional capital of Rs 2,500 crore upfront, to support the credit growth of the merged entity.