LVB-DBS Bank Merger: Key Highlights Of Crisis-Hit Lakshmi Vilas Bank's Merger With DBS India

Lakshmi Vilas Bank Ltd. branches will operate as DBS Bank India Ltd. branches from November 27.

Mumbai: Outside view of Lakshmi Vilas Bank in Mumbai. (PTI Photo)

The Union Cabinet approved the merger of 94-year-old capital-starved Lakshmi Vilas Bank (LVB) with DBS Bank India. This comes after the Reserve Bank of India (RBI) on November 17, proposed the merger of the Indian bank with Singapore’s DBS bank venture in India. The RBI, earlier in consultation with the Central government, superseded the board of directors of LVB for a period of 30 days owing to a severe deterioration in the financial position of the bank. Following are the key highlights of the merger-

• The Union Cabinet on Wednesday approved the merger of capital-starved Lakshmi Vilas Bank (LVB) with the Indian arm of Singapore-based DBS Bank India.

 

• As part of the amalgamation, DBIL will infuse fresh capital of Rs 2,500 crore into the capital-starved LVB.

 

• According to the draft scheme of amalgamation, the entire paid-up share capital of LVB would be written off after the transaction.

 

• LVB and DBS Bank India merger will come into effect from November 27, 2020.

 

• Union minister Prakash Javadekar said, “With the merger, there will no further restrictions on the depositors regarding the withdrawal of their deposit.”

 

• “The board which has been removed - the liability will be fixed and those who have made mistakes will be punished and there will be an overall improvement on oversight,” said Mr. Javadekar.

 

• Earlier, the government decided to place LVB under moratorium till December 16, 2020.

 

• DBS was the first foreign bank to receive a banking license after the central bank allowed foreign banks to set up a wholly-owned subsidiary in 2014.

 

• The RBI, considering the situation had put LVB under Prompt Corrective Action in September 2019.

 

• LVB had reported a widening of its net loss at Rs 397 crore in the second quarter ended September 2020 due to a rise in bad loans and provisions.

• On 25 September, the shareholders of the bank had voted out seven members from the board, including the then MD and CEO S Sundar.

• LVB is the second private sector bank after Yes Bank which has run into rough weather during this year.