The Reserve Bank on Wednesday said the amalgamation of Lakshmi Vilas Bank with DBS Bank India will come into force from November 27 and the moratorium imposed on the crisis-ridden lender will be removed on that day. The RBI issued the statement within hours of the Cabinet clearing the Scheme of Amalgamation of Lakshmi Vilas Bank Limited (LVB) with DBS Bank India Limited (DBIL).
"The amalgamation will come into force on the Appointed date i.e. November 27, 2020. All the branches of the Lakshmi Vilas Bank Ltd. will function as branches of DBS Bank India Ltd. with effect from this date," the RBI said.
Depositors of LVB will be able to operate their accounts as customers of DBS Bank India with effect from Friday.
"Consequently the moratorium on the Lakshmi Vilas Bank Ltd. will cease to be operative from that date," it said. The RBI had superseded the board of LVB on November 17 following the imposition of a moratorium on the private sector lender. DBS Bank India Ltd is making necessary arrangements to ensure that service, as usual, is provided to the customers of Lakshmi Vilas Bank, the RBI added.
The government on Wednesday approved merger of LVB with DBS Bank India Ltd (DBIL) and removed restrictions on withdrawal of deposits by depositors. The Union Cabinet has approved the merger of the LVB with DBS Bank India Limited, Union Minister Prakash Javadekar told reporters, adding the decision will provide comfort to 20 lakh depositors and protect the services of 4,000 employees.
“Cabinet approves Scheme of Amalgamation of Lakshmi Vilas Bank with DBS Bank India Limited; with this there will no further restrictions on the depositors regarding withdrawal of their deposits,” the official spokesperson said in a tweet. The minister said that those responsible for deteriorating financial health of the LVB would be penalised.
The government on November 17 on the advice of the RBI imposed a 30-day moratorium on the crisis-ridden LVB restricting cash withdrawal at Rs 25,000 per depositor. The RBI simultaneously placed in public domain a draft scheme of amalgamation of LVB with DBIL, a banking company incorporated in India under Companies Act, 2013, and having its Registered Office at New Delhi.
The Reserve Bank had also superseded the board of the LVB and appointed TN Manoharan, former non-executive chairman of Canara Bank, as administrator of the bank for 30 days. LVB is the second private sector bank after Yes Bank which has run into rough weather during this year. In March, capital-starved Yes Bank was placed under a moratorium. The government rescued Yes Bank by asking state-run State Bank of India to infuse Rs 7,250 crore and take 45 per cent stake in the bank.
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