Lakshmi Vilas Bank Amalgamation: Cabinet Approves RBI's Proposal To Merge LVB With DBS Bank; No Restrictions Of Withdrawal On Depositors

Union Minister Prakash Javadekar on Wednesday announced that Union Cabinet has approved the scheme of Amalgamation of Lakshmi Vilas Bank with DBS Bank India Limited.

Image: ANI

Union Minister Prakash Javadekar on Wednesday announced that Union Cabinet has approved the scheme of Amalgamation of Lakshmi Vilas Bank with DBS Bank India Limited. With the approval of the scheme, LVB will be amalgamated with DBIL from the appointed date and DBIL will infuse fresh capital of Rs 2,500 crore into LVB. The development has come a week after the central government on November 17, placed Tamil Nadu-based private sector lender under moratorium and capped withdrawal from the bank at Rs 25,000 for one month. The Reserve Bank of India (RBI), in consultation with the Central government, superseded the board of directors of LVB for a period of 30 days owing to a severe deterioration in the financial position of the bank. LVB needed capital urgently due to deterioration in asset quality and scrambled to find a buyer for the past year. It was reportedly in talks with Clix Capital for capital infusion and a possible merger. As per the latest development, there'll be no further restrictions on depositors regarding the withdrawal of their deposits, Prakash Javadekar said. The Union Minister addressing the press today further said that the government has asked the RBI to take action against the people in the management who drives banks to the brink of collapse. The cabinet further said that the speedy amalgamation and resolution of the stress in LVB is in line with Government's commitment to a clean banking system while protecting the interests of depositors and the public as well as the financial system.