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This article is more than 2 year old.

RBI imposes restrictions on Lakshmi Vilas Bank due to high NPAs amid police probe

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Private sector Lakshmi Vilas Bank on Saturday said the Reserve Bank of India (RBI) had initiated Prompt Corrective Action (PCA) against it on account of its high non-performing assets (NPA) and others.

RBI imposes restrictions on Lakshmi Vilas Bank due to high NPAs amid police probe
Private sector Lakshmi Vilas Bank on Saturday said the Reserve Bank of India (RBI) had initiated Prompt Corrective Action (PCA) against it on account of its high non-performing assets (NPA) and others.
In a statutory filing in the BSE, Lakshmi Vilas Bank said: "The RBI has initiated PCA on account of high net NPA, insufficient capital to risk assets weighted ratio (CRAR, also known as capital adequacy ratio CAR) and common equity tier-1, negative return on assets for two consecutive years and high leverage."
The PCA comes after the RBI carried out an on-site inspection of the Bank on March 31 under Risk-Based Supervision.
According to the bank, RBI has advised it on the restrictions imposed and the actions to be taken. The Lakshmi Vilas Bank said it will report the monthly progress on the RBI directions.
"The PCA is aimed at improving the bank's performance and will not have any adverse impact on its normal day-today operations, including acceptance/repayment of deposits in the normal course," the bank said.
Earlier, Religare Finvest Ltd (RFL) has accused Lakshmi Vilas of misappropriating $111.4 million it kept with the bank as a fixed deposit, according to a copy of a complaint filed with the Economic Offences Wing of the New Delhi police.
The private lender said in a statement on Friday that the registration of the police complaint against does not mean anything at this stage and that the bank will cooperate with the investigating agency and regulatory authorities.
The RBI's action could be a set back to Lakshmi Vilas plans to merge operations with housing finance firm Indiabulls Housing Finance Ltd (IBHF) in a share-swap deal.
Other banks such as IDBI Bank, Central Bank of India and United Bank of India are also under RBI prompt corrective actions.
(With inputs from Reuters)
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