RBI delays final merger scheme of Lakshmi Vilas Bank to next week

According to a Central Bank official, the RBI failed to issue the final merger scheme for Lakshmi Vilas Bank with DBS India on Friday and will tentatively do it by next week.

LVB was placed under a moratorium followed by a draft amalgamation scheme on November 17. The RBI promised to issue the final merger scheme on November 20. This would have helped in completing the resolution for the 94-year-old by December 16.

The promoters own just 6.8 percent of the bank, K R Pradeep owns 4.8 percent, and the other three promoter families N Ramamritham, NT Shah, and SB Prabhakaran collectively own 2 percent. Retail shareholders hold over 45 percent of LVB’s shares. Institutional investors, including Indiabulls Housing, owns over 20 percent.

Some of the institutional investors are prolific Finvest (3.36 percent), Srei Infra Finance (3.34 percent), Capri Global Advisory Services (2 percent), MN Dastur & Co (1.89 percent), Capri Global Holdings (1.82 percent), Trinity Alternative Investment Managers (1.61 percent), Boyance Infrastructure (1.36 percent) and LIC (1.32 percent).

The single majority promoter K R Pradeep said that he would wait for the final merger scheme from the RBI before planning his course of action. He has submitted his objection and demands some value for his investment.

Pradeep added, four promoters might approach SEBI (Security and Exchange Board of India) to stall automatic delisting of LVB shares and denies any equity value of their holdings.

The RBI had said, “One and from the appointed date, 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, shall stand written off.”

Since the accouchement, LVB shares lost 35 percent of their value, and on Friday’s closing session, the shares fell by 10% to Rupees. 9 on the BSE.

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