DBS Bank India on Monday said customers of Lakshmi Vilas Bank, which has now been merged with it, can continue to access all banking services, and interest rates on savings and fixed deposits are unchanged as of now. Lakshmi Vilas Bank (LVB) has now been amalgamated with DBS Bank India Ltd (DBIL), the wholly-owned subsidiary of DBS Group Holdings Ltd, DBS Bank India said in a statement.
The Reserve Bank did not issue the final merger scheme for Lakshmi Vilas Bank (LVB) with DBS India on Friday as stated earlier and is likely to do so only next week, according to a central bank official. While placing LVB under a moratorium and then issuing a draft amalgamation scheme on November 17, the RBI had said it would issue the final merger scheme on November 20 (Friday) so as to help complete the resolution for the 94-year-old lender by December 16. However, as of 2200 hrs on Friday, the central bank did not issue the final merger scheme. When contacted, a senior RBI official told PTI that the same would now be issued early next week.
A day after the RBI put in public domain a draft scheme of merger of Lakshmi Vilas Bank (LVB) with subsidiary of Singapore-based DBS, public sector banks' officer union AIBOC on Wednesday said the amalgamation is not in the national interest and demanded the consolidation with any PSB. The proposed amalgamation of the cash-strapped LVB with DBS Bank India seems to be a ploy to provide entry of foreign banks into the country in a big way, All India Bank Officers' Confederation (AIBOC) president Sunil Kumar said. The Indian banking sector provides huge opportunity for growth, so the foreign banks have been looking at inorganic route to expand their presence for long, he said.
Last month, the bank was placed under Prompt Corrective Action due to high level of bad loans, lack of sufficient capital to manage risks and negative return on assets for two consecutive years.
The Reserve Bank on Wednesday said the amalgamation of Lakshmi Vilas Bank with DBS Bank India will come into force from November 27 and the moratorium imposed on the crisis-ridden lender will be removed on that day. The RBI issued the statement within hours of the Cabinet clearing the Scheme of Amalgamation of Lakshmi Vilas Bank Limited (LVB) with DBS Bank India Limited (DBIL).
While Gupta, 60, can rightfully bask in the glory he has achieved for his bank in the subcontinent, his peers in foreign banks will have to revisit their India play, especially the local incorporation model, says Raghu Mohan.
While Dhanlaxmi Bank faces governance issues similar to those in Lakshmi Vilas Bank, the financial profile of the Kerala-based bank is better.
The government on Wednesday approved merger of crisis-ridden Lakshmi Vilas Bank (LVB) with DBS Bank India Ltd (DBIL) and removed restrictions on withdrawal of deposits by depositors. The Union Cabinet has approved the merger of the LVB with DBS Bank India Limited, Union Minister Prakash Javadekar told reporters, adding the decision will provide comfort to 20 lakh depositors and protect the services of 4,000 employees.
According to experts, 'Lakshmi' and the logo 'Godesses Lakshmi' have a lot of value in India and are the biggest driver for the Bank. Retaining the Lakshmi name and logo will help DBS.
Tamil Nadu-based Lakshmi Vilas Bank (LVB) with pre-independence lineage on Friday lost its identity after its merger with the Indian subsidiary of Singapore's DBS Bank. The debt-ridden 94-year old old bank's fate was sealed with Union Cabinet headed by Prime Minister Narendra Modi approving Scheme of Amalagamation on Wednesday.
LVB had faced some serious flak in terms of bad loans, earnings and credit rating downgrades, since 2016.
With a potential liability of Rs 750-800 crore, sources say Clix Capital's stand on the matter would be crucial in finalising the merger valuation.
PNB has rich experience in the integration of commercial banks.
It has been a year since the Reserve Bank of India (RBI) initiated prompt corrective action (PCA), an exercise that puts weak banks under central bank scrutiny, against the 94-year-old Lakshmi Vilas Bank (LVB). But recently, this low-profile Chennai-headquartered bank found itself attracting some unwonted publicity when 60 per cent of its shareholders voted against a proposal to re-appoint seven directors, including one of the promoters, K R Pradeep (who holds around 2 per cent), and the company's managing director & chief executive officer S Sundar.
Its obsession for growth, chasing corporate clients and giving up its original mandate of meeting the needs of local trade and businesses. A quarter of its loan book has gone bad. That's an error of business strategy, points out Tamal Bandyopadhyay.
The combined deposits of its Indian operations stood at SGD 9 billion and net advances were at SGD 5.6 billion at the end of December 2020.
'It's a toss-up between a fire sale of equity or merger with a strong bank,' points out Tamal Bandyopadhyay.
The BJP member also sought to put the LVB-DBS merger on hold in order to facilitate a forensic audit of the takeover of the assets of both banks.
The Reserve Bank of India (RBI) has approved a three-member committee of directors to run the day-to-day functioning of cash-strapped Lakshmi Vilas Bank.
The PCA plan covers various suggestions or measures to recover non-performing assets (NPAs), reduce costs, boost capital, downsize risk-weighted assets, and improve profitability, among others. The LVB management is in the process of implementing all of these, said sources.
The government on Tuesday placed Lakshmi Vilas Bank under one-month moratorium, superseded its board and capped withdrawals at Rs 25,000 per depositor. The step was taken by the government, on the advice of the Reserve Bank, in view of the declining financial health of the private sector lender. In a statement, the RBI said in the absence of a credible revival plan, with a view to protect depositors' interest and in the interest of financial and banking stability, there was no alternative but to apply to the central government for imposing a moratorium under Section 45 of the Banking Regulation Act, 1949.
Mired in corruption, politics and with a history of suicides by its hapless depositors, PMC Bank's revival is a challenge very different from Yes Bank and LVB, both for the regulator and the rescuer, observes Tamal Bandyopadhyay.
Unlike in the past, when old private banks compromised upon underwriting standards to take on the bulk, they've now realised that scaling up at the cost of quality isn't worth the while. These banks have also readjusted growth targets when required, and rebalanced books to preserve capital and asset quality.
'On the evening of the 17th, the RBI said the bank was put on moratorium.' 'Within an hour, the RBI said it would be merged with DBS.' 'How did DBS come to know within an hour that LVB was in trouble?' 'It means, what happened was match-fixing.'
Only when we are part of the same family, which will happen down the line, then, of course, we will give them (PMC depositors) all the assurance and the comfort.'
the three investors that have submitted their final bids are not commercial banks. Among the three, one is a non-banking financial company. Another distinctive feature of the revival is that PMC may lose its cooperative bank characteristic after its reconstruction.
Delivering a public speech hours after the RBI launched a rescue act for Yes Bank on March 6, Governor Shaktikanta Das reiterated the RBI's affirmation to do whatever was needed to combat the coronavirus impact. On that day, India had only one confirmed COVID-19 infection, the World Health Organisation was five days off from declaring it as a pandemic and the financially debilitating lockdowns were not even on the horizon. Das' promise on efforts to mitigate COVID-19 impact appeared as a footnote in news reports from the event.
'When there is unlocking, there is demand revival.' 'This is going to be the main growth engine in this kind of an economic scenario.'
Omkeshwar Singh, Head, Rank MF, a mutual fund investment platform, answers your queries.
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