In view of its weak financials, the Reserve Bank has placed the Lakshmi Vilas Bank Limited under moratorium with immediate effect. In a statement issued today, RBI said the moratorium will be effective for thirty days with a view to protect depositors’ interest.

Accordingly, RBI has capped all cash withdrawals from the bank to twenty five thousand rupees.
According to the banking regulator, the private sector lender has seen a steady decline in its financials with it incurring losses over the last three years. It may be recalled that the Karur based bank was placed under the Prompt Corrective Action framework in September 2019 and yet there was no improvement in its position with declining advances and mounting non-performing assets.
Meanwhile, RBI has appointed the former Non Executive Chairman of Canara Bank, T. N. Manoharan as the banks’ administrator for the moratorium period.

Besides, RBI has also announced the draft scheme of amalgamation of The Lakshmi Vilas Bank with Delhi based DBS Bank India Limited - DBIL.  RBI said DBIL has a strong parentage and a healthy balance sheet with strong capital support, adding that its combined balance sheet would remain healthy even after the proposed amalgamation. 

The apex bank said the draft scheme has been sent to both the banks for their consideration while public comments, including those of their depositors and creditors will be accepted till 20th November and a final decision taken thereafter

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