Lakshmi Vilas Bank investors oppose merger with DBS bank, seek RBI to rethink

Lakshmi Vilas Bank (LVB) investors are planning to approach the Reserve Bank of India to oppose its decision to merge the 94-year-old Chennai based lender with DBS Bank as the value of their holding will be written off since shares of LVB will be delisted.

After putting LVB on moratorium with withdrawals capped at Rs 25,000, the RBI announced a draft scheme for amalgamation of LVB and DBS India Ltd (DBIL) — the wholly-owned subsidiary of DBS Singapore.


According to the draft scheme of amalgamation, “On and from the appointed date, the transferor bank shall cease to exist by operation of the scheme, and its shares or debentures listed in any stock exchange shall stand delisted without any further action from the transferor bank, transferee bank or order from any authority.”

“The shareholders and investors have stood by the bank during its crisis period and their interest should also be protected. In fact, in several old generation private banks, many depositors are also the shareholders. Hence, we would urge RBI to reconsider the proposal of writing off the paid-up share capital and reserves, which would affect both retail and institutional shareholders of the bank,” the investor said seeking anonymity.

The proposed amalgamation of the cash-strapped LVB with DBS Bank India seems to be a ploy to provide entry of foreign banks into the country in a big way, All India Bank Officers’ Confederation (AIBOC) President Sunil Kumar said. Public sector banks’ officer union AIBOC too opposed the LVB-DBS amalgamation saying it is not in the national interest and demanded consolidation with any PSB.

Shareholders have also suggested other options for the resolution of the stressed lender, including a bidding process from prospective suitors.

“The RBI can also appoint an independent valuer to arrive at a fair valuation and prevent wealth erosion of shareholders, who had no role to play in the day to day management of the bank,” the said as per the report.

Kumar expressed apprehension that the unbridled entry of foreign banks “would lead the country into economic slavery and they will plunder the resources”. He added that as a stakeholder, AIBOC requests the Reserve Bank of India (RBI) to re-think its stand on the proposed amalgamation in the national interest.