Key takeaways: Laxmi Vilas Bank’s administrator convenes concall to shed light on merger

Laxmi Vilas Bank Limited administrator, Mr T N Manoharan convened a press meet today to answer queries specific to LVB’s amalgamation with DBS as ordained by RBI.

The administrator mainly assured account holders that there is no need to panic. Customers and stakeholders were assured that their interests will be duly protected. The Q2 losses suffered by the bank were mainly attributed to deterioration of asset quality and high slippages, and the bank had to undergo especially tough times due to liquidity crunch. The account holders were relieved with the update that they can withdraw more than 25,000 for emergencies till 5 lakh, where withdrawal is subject to guidelines (in case of unavoidable emergencies, marriages, higher education or medical treatment). ATMs and branches shall start operating, which is first priority for the bank as specified by the administrator, T N Manoharan.


The second priority is to reassure the public and instil confidence in public. The interests of the employees which are distributed in 563 branches across the country shall be protected in amalgamation, they shall be appointed in transferee bank on the same conditions of service as the previous bank. RBI shall hold the final decision on further course to be taken by the bank and restoration of depositor withdrawal limit in a phased manner is currently a key priority for the bank. The administrator T N Manoharan is confident that a resolution shall be placed before the December 16 deadline. After 20 November, RBI shall take cognizance of suggestions once amalgamation is over. Tier 1 bonds were null and Tier 2 bonds are 368 crores as declared by the administrator.

RBI on Monday announced 1-month moratorium for LVB and its merger with DBS. Old generation private sector lender, Lakshmi Vilas Bank would be the third bank to get rescued by the Reserve Bank of India (RBI) in a span of just a year, the other 2 being Yes bank and Punjab and Maharashtra Co-operative (PMC) Bank.  With Lakshmi Vilas Bank, the RBI has already set the ball rolling with DBS India through a draft amalgamation scheme. To be sure, Lakshmi Vilas Bank will be under a moratorium for a month during which means depositors can withdraw only up to ₹25,000 per account. But the RBI has said that a quick merger would mean depositors can get their money back faster. The various details specified if the merger package show that the central bank has been extremely careful in both selecting the suitor and treating various financial instruments of the troubled bank.