From 17th November 2020 till 16th December 2020, the Central Government after, an application made by the Reserve Bank of India, has issued an order of moratorium against the Lakshmi Vilas Bank Limited. The order will be in effect by 18.00 hrs and the bank will have a withdrawal limit of Rs 25,000 per recipient.
There are certain exceptions to this moratorium, people with medical treatment, paying higher educational fees (in-country or abroad), and unavoidable emergencies can remove more than Rs 25000.
During this period, the Lakshmi Vilas Bank Limited can make payments for repaying loans or issuing grants against government securities. These unpaid amounts should be dated before the imposition of the moratorium order.
The bank has undergone a steady decline with continuous losses over the last three years that has depleted its net-worth. The losses are expected to continue due to declining advances and increasing non-performing assets. To make matter worse, the bank could not raise funds for its capital, and it is in the middle of negative net-worth and losses.
The bank was placed under the Prompt Corrective Action (PCA) framework in September 2019, considering the breach as on March 31, 2019.