0

0

0

0

0

0

0

0

0

This article is more than 1 year old.

LVB: Depositors' money safe; confident of resolution before moratorium end, says Administrator TN Manoharan

Mini

Ensuring a smooth merger with DBS Bank India will be Lakshmi Vilas Bank's (LVB) top priority, said TN Manoharan, the bank’s newly-appointed administrator.

LVB: Depositors' money safe; confident of resolution before moratorium end, says Administrator TN Manoharan
Protecting the interest of depositors and ensuring a smooth merger with DBS Bank India will be Lakshmi Vilas Bank's (LVB) top priority, said TN Manoharan, the bank’s newly-appointed administrator.
"Customers of the bank should not be worried," Manoharan said while addressing the media earlier today after taking charge as the administrator. "We are confident that we will be able to implement the resolution plan before December 16," he said.
Also read:
The Reserve Bank of India (RBI) superseded the board of LVB and brought the bank under a 30-day moratorium yesterday, due to the bank’s rapidly deteriorating financial condition, continuous deposit withdrawals, and serious governance issues.
RBI also simultaneously announced a draft scheme of amalgamation for the bank, proposing its merger with DBS Bank India Limited (DBIL). Withdrawals have been capped at Rs 25,000 per account holder until the moratorium ends on December 16.
"We want to regenerate confidence among employees of the bank, we want to state that their interest will be taken care of under the amalgamation plan...Their remuneration and contracts will continue as before," Manoharan said, adding that it is also possible that the merger creates more jobs in the future.
Clarifying on the proposed delisting and subsequent merger of LVB with DBS Bank India, Manoharan said that in this particular instance, the Banking Regulation Act would take precedence over the Companies Act, and shareholders’ approval would not be required for the process. He did not comment on any potential litigation worries with the shareholders’ wealth-getting wiped out as per the draft scheme.
The bank has enough currency available to meet the demands of any depositor who wishes to withdraw up to Rs 25,000 from his/her account, the administrator said, and added that the bank was prepared for any eventuality with the support of the regulator. He did not, however, confirm if RBI would provide a special liquidity facility to the bank, like what happened in the case of Yes Bank.
"Customers across the country have withdrawn about Rs 10 crore from their accounts since last evening (when the moratorium was announced," Manoharan said, but he was confident that there would be no run on the bank, and customers still held faith in the 94-year-old bank.
The bank has outstanding deposits of around Rs 20,050 crore as compared with Rs 20,953 crore as of September 30, and advances of about Rs 17,000 crore. He said the merged entity would be well capitalised, and DBS Bank would bring in Rs 2,500 crore upfront to aid the bank’s growth once the scheme of amalgamation is implemented.
next story