Lakshmi Vilas Bank Placed Under Moratorium, Withdrawals Capped At Rs. 25000

The private sector lender Lakshmi Vilas bank has been placed under moratorium which is effective 6 pm, November 17 till December 16. The moratorium has been enforced based on the application submitted by the apex bank under section 45 of BR Act.

On the move, the RBI has also capped withdrawals by customers to Rs. 25000. The bank for the past 3 years had been logging losses, resulting in steady decline in its financials.

"In absence of any viable strategic plan, declining advances and mounting non-performing assets (NPAs), the losses are expected to continue. The bank has not been able to raise adequate capital to address issues around its negative net-worth and continuing losses, the RBI said in the statement.

In March, RBI had put Yes Bank under moratorium for two weeks. And before that PMC Bank was placed under moratorium.

Soon, after the announcement of placing the private bank LVB under moratorium, RBI in its statement said that the bank will be amalgamated with DBS Bank India.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, said the RBI statement.

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