New Delhi: The Reserve Bank of India (RBI) has made a big announcement regarding Laxmi Vilas Bank which has been placed in the Moratorium on behalf of the Central Government. The Reserve Bank has stated that Lakshmi Vilas Bank will merge with DBS Bank India Ltd. Earlier, while implementing the moratorium, the RBI had said that the decision had to be taken as the bank had no strong plan for revival. Meanwhile, the RBI has also seized the power of the bank’s Board of Directors (BoD).
DBS Bank will make a hefty investment of Rs 2,500 crore
The Reserve Bank said that for banking and financial stability, the decision had to be taken to put Lakshmi Vilas Bank in the moratorium first and then merge with DBS Bank. Announcing the Merger Scheme, the RBI said that DBS Bank would invest Rs 2,500 crore to support the credit growth of the new entity. The moratorium applied to Lakshmi Vilas Bank is different from Yes Bank. In fact, the moratorium was implemented for the reconstruction of Yes Bank, but in the case of Lakshmi Vilas Bank, the central bank has announced to merge with DBS Bank under pressure.
Lakshmi Vilas Bank was preparing to merge with Clicks Group
Earlier, the Finance Ministry, considering the poor condition of the bank, had decided to implement a moratorium on it till December 16. The Reserve Bank said that DBS Bank India Limited has sufficient capital and its financial position will remain strong even after the merger. Implementing a moratorium on Lakshmi Vilas Bank is a very important decision as the news was coming for the last few days that the bank was preparing to merge with Clicks Group.
Lakshmi Vilas Bank’s financial position has deteriorated. Therefore, capital is badly needed to keep the bank running. The re-appointment of all the seven directors was rejected in the September 25 meeting of the shareholders of this bank in Chennai. These include the bank’s managing director and CEO S. Beautiful included.
