On Wednesday, shares of Lakshmi Vilas Bank Ltd hit upper circuit of 4.79 percent to Rs 7.65 after the Union Cabinet provided its approval for DBS Group Holdings's Indian arm to take over Lakshmi Vilas Bank in a deal pushed by the RBI.
It is the first time that a foreign entity has rescued an ailing domestic bank.
On 17 November, the RBI announced a draft merger scheme for the 94-year old LVB, wherein DBS India will infuse Rs 2,500 crore regulatory capital into the cash-strapped. The entire paid-up share capital of the bank will be written off upon merger, causing deposits of LVB to be absorbed by books of DBS India.
LVB has been placed under moratorium till 16 December, wherein the withdrawal limit for all types of accounts held by a depositor cannot exceed Rs 25,000.