New Delhi: Crisis-hit Lakshmi Vilas Bank (LVB) will merge into the Indian arm of Singapore-based DBS Bank on Friday (November), and with this there will no further restrictions on the depositors regarding withdrawal of their deposits.
The RBI has notified the effective date of merger soon after the Union Cabinet headed by Prime Minister Narendra Modi approved the Scheme of Amalgamation of LVB with DBS Bank India Ltd (DBIL). All the branches of LVB will function as branches of DBIL with effect from November 27, the Reserve Bank of India (RBI) said in a statement.
"Customers, including depositors of the Lakshmi Vilas Bank Ltd will be able to operate their accounts as customers of DBS Bank India Ltd (DBIL) with effect from November 27, 2020. Consequently the moratorium on the Lakshmi Vilas Bank Ltd. Will cease to be operative from that date," it said.
The RBI had superseded LVB's board on November 17 after the private sector lender was placed under a moratorium.
On November 17, to protect depositors' interest and in the interest of financial and banking stability, on RBI's application under section 45 of the Banking Regulation Act, 1949, Lakshmi Vilas Bank had been put under moratorium for a period of 30 days. During the a one-month moratorium, period the government had capped withdrawals at Rs 25,000 per depositor.
In parallel, RBI, in consultation with government, superseded the Board of Directors of LVB and appointed an Administrator to protect the depositors' interest.
After inviting suggestions and objections from the public and stakeholders, RBI prepared and provided a scheme for the bank's amalgamation for the government's sanction, well in advance of end of the period of moratorium so that restrictions on withdrawal faced by the depositors are minimised.
DBIL is a banking company licenced by RBI and operating in India through wholly owned subsidiary model, DBIL has a strong balance-sheet, with strong capital support and it has the advantage of a strong parentage of DBS, a leading financial services group in Asia, with presence in 18 markets and headquartered and listed in Singapore. The combined balance-sheet of DBIL would remain healthy even after amalgamation and its branches would increase to 600.