Hyderabad: The Reserve Bank of India (RBI) on Tuesday released a draft scheme to amalgamate the struggling Lakshmi Vilas Bank (LVB) with DBS Bank India Ltd (DBIL).
On the same day, the Ministry of Finance capped withdrawal limit at Rs 25,000 per depositor for a period of one month.
Back to back announcements from the Central Bank and the Government have reminded the depositors of the recent sorry state of affairs in the Yes Bank and PMC Bank.
Read: Govt caps withdrawal from Lakshmi Vilas Bank at Rs 25,000
Here are five important things to know:
- The Chennai-based Lakshmi Vilas Bank (LVB) has a 94-year history, with an established retail and SME customer base, and a strong presence in South India.
- Problems within the private sector lender came to the fore last September when a section of shareholders voted out seven of its directors, including MD & CEO as well as promoters KR Pradeep and N Saiprasad. As the bank finances were nosediving, the shareholders were unhappy with the bank's top leadership.
- In the last week of September, the RBI approved a three-member Committee of Directors to manage day-to-day affairs of the bank. While Meeta Makhan was the head of the Committee, Shakti Sinha and Satish Kumar Kalra were its other two members.
- On 17 November, the RBI announced a draft amalgamation scheme for the LVB. To support the amalgamation, Singapore's DBS will inject Rs 2,500 crore (SGD 463 million) into DBIL if the scheme is approved.
- On the other hand, All India Bank Employees' Association (AIBEA) has criticised the RBI move saying RBI's inaction has resulted into moratorium on LVB. The association demanded the government to merge LVB with a public sector bank.
(With inputs from agencies)
