RBI-appointed administrator for Lakshmi Vilas Bank T.N. Manoharan on Wednesday said the bank has enough liquidity to pay back depositors and assured them that their money is safe. Lakshmi Vilas Bank has ₹20,000 crores in deposits and ₹17,000 crores in advances, he added.
The RBI on Tuesday had imposed a 30-day moratorium on struggling lenders, restricting cash withdrawals at ₹25,000 per depositor and announced a draft scheme for the amalgamation of the bank with DBS Bank India, a subsidiary of DBS of Singapore. The moratorium will be effective up to December 16, 2020, the central bank said in its statement.
The step was taken on the advice of the Reserve Bank because of the private sector bank’s deteriorating financial health.
He said post-merger, all LVB employees will retain their jobs at the same remuneration. “Will try to ensure there is no shortage of cash at any bank branches,” said Manoharan while adding that there has been no run on deposits in the bank.
The Reserve Bank also superseded the board of Lakshmi Vilas Bank (LVB) and appointed Manoharan, former non-executive chairman of Canara Bank, as its administrator for 30 days. The RBI placed in the public domain a draft scheme of amalgamation of LVB with DBS Bank India Ltd (DBIL).
DBS Bank India, in a statement, said the proposed amalgamation will provide stability and better prospects to LVB’s depositors, customers and employees.
“To support the amalgamation, DBS will inject ₹2,500 crores (SGD 463 million) into DBIL if the scheme is approved. This will be fully funded from DBS’ existing resources,” it said.
“DBS’ capital infusion aimed at triggering credit growth at LVB,” said Manoharan. RBI will issue the final merger draft on November 20.
