Lakshmi Vilas Bank Placed under Moratorium, RBI Proposes Merger with DBS Bank India

Mumbai: Lakshmi Vilas Bank has been put under moratorium effective 6 pm, November 17 until December 16, a RBI release said.

The moratorium has been imposed on the basis of application submitted by RBI under Sec 45 of BR Act.

RBI also put cap of Rs. 25000 on the Payments to creditors during the moratorium.

The Reserve Bank of India has today placed in public domain a draft scheme of amalgamation of The Lakshmi Vilas Bank Ltd. (LVB) with DBS Bank India Ltd. (DBIL), a banking company incorporated in India under Companies Act, 2013, and having its Registered Office at New Delhi.

The Reserve Bank assures the depositors of the bank that their interest will be fully protected and there is no need to panic.

DBIL is a wholly owned subsidiary of DBS Bank Ltd, Singapore (“DBS”), which in turn is a subsidiary of Asia’s leading financial services group, DBS Group Holdings Limited and has the advantage of a strong parentage. It has been issued a banking license to operate as banking company under Section 22 (1) of the B R Act, on October 4, 2018.

DBIL has a healthy balance sheet, with strong capital support. As on June 30, 2020, its total Regulatory Capital was Rs 7,109 crore (against Capital of Rs 7,023 crore as on March 31, 2020).

As on June 30, 2020, its GNPAs and NNPAs were low at 2.7% and 0.5% respectively; Capital to Risk Weighted Assets Ratio (CRAR) was comfortable at 15.99% (against requirement of 9%); and Common Equity Tier-1 (CET-1) capital at 12.84% was well above the requirement of 5.5%. Although the DBIL is well capitalised, it will bring in additional capital of Rs 2500 crore upfront, to support credit growth of the merged entity. Owing to comfortable level of capital, the combined balance sheet of DBIL would remain healthy after the proposed amalgamation, with CRAR at 12.51% and CET-1 capital at 9.61%, without taking into account the infusion of additional capital.

The Reserve Bank invites suggestions and objections, if any, from members, depositors and other creditors of transferor bank (LVB) and transferee bank (DBIL), on the draft scheme.