The amalgamation of Lakshmi Vilas Bank with DBS bank will come into effect from today. All the branches of LVB will function as the Indian arm of Singapore-based DBS Bank and LVB customers, including depositors, will be able to operate as DBS Bank India Ltd customers from today.
The withdrawal cap of Rs 25,000 will also be removed effective today.
“Customers, including depositors of the Lakshmi Vilas Bank Ltd, will be able to operate their accounts as customers of DBS Bank India Ltd with effect from November 27, 2020,” the LVB said in a regulatory filing.
“Consequently the moratorium on the Lakshmi Vilas Bank Ltd. will cease to be operative from that date. DBS Bank India Ltd is making necessary arrangements to ensure that service, as usual, is provided to the customers of the Lakshmi Vilas Bank Ltd.”
The RBI on Wednesday notified the effective date of the merger soon after the Union Cabinet headed by Prime Minister Narendra Modi approved the Scheme of Amalgamation of LVB with DBS Bank India Ltd (DBIL).
The RBI had superseded LVB’s board on November 17 and had placed LVB under a moratorium for 30 days to protect depositors’ interest and in the interest of financial and banking stability
Union Minister Prakash Javadekar said, “The board (of LVB) has been removed, liability would be fixed and those who made mistakes would be punished. There would be an improvement in overall oversight also so as not to repeat mistakes in the future. This is in line with the cleaning up of the banking system.”
The government has told the RBI that the guilty should be punished. “The people who start banks, commit fraud, and bring them on the verge of collapse should be punished. Together with this, there should be an improvement in the RBI oversight mechanism,” the Minister said.
LVB is the second private sector bank, after Yes Bank, which ran into rough weather this calendar year. In March, capital-starved Yes Bank was placed under moratorium. The government rescued Yes Bank by asking state-run State Bank of India to infuse Rs 7,250 crore and take a 45 percent stake in the bank.
Employees and depositors of LVB will be protected, but, the entire amount of the paid-up share capital and reserves and surplus, including the balances in the share/securities premium account of the transferor bank (LVB), stands written off.
