Lakshmi Vilas Bank shares drop 20% after month-long moratorium imposition

Lakshmi Vilas Bank’s shares on Wednesday dropped as much as 20 percent to hit the lowest trading limit permissible after the Central government placed the bank under a month-long moratorium and superseded its board. The scrip cracked by 20 percent on BSE to hit its lower circuit limit of Rs 12.4. On National Stock Exchange, the shares fell by 19.94 percent to rest in the lower circuit of Rs 12.45.

The government on Tuesday had placed Lakshmi Vilas Bank under a month-long moratorium, had superseded its board and capped withdrawable limit at Rs 25,000 per depositor.

The government took this step on the advice of the Reserve Bank of India keeping in mind the declining financial health of the private sector lender after facing severe backlashes by the COVID-19 pandemic.

T N Manoharan, former non-executive chairman of Canara Bank, has been appointed as the new administrator of the bank and the central bank has also put forward in the public domain a draft scheme of amalgamation of Lakshmi Vilas Bank with DBS Bank.

Lakshmi Vilas Bank Limited was founded in 1926 by Shri V.S.N. Ramalinga Chettiar with an objective to fulfil the financial needs of people in the Karur area involved in trading businesses, industry and agriculture and later expanded their branches.