Lakshmi Vilas Bank placed under moratorium, withdrawals capped at Rs 25,000; RBI proposes merger with DBS Bank

TN Manoharan, former non-executive chairman of Canara Bank, has been appointed as the administrator of the bank

Press Trust of India November 17, 2020 21:16:22 IST
Lakshmi Vilas Bank placed under moratorium, withdrawals capped at Rs 25,000; RBI proposes merger with DBS Bank

RBI has placed in public domain a draft scheme of amalgamation of Lakshmi Vilas Bank with DBS Bank. News18

Mumbai: The government on Tuesday placed Lakshmi Vilas Bank under a one-month moratorium, superseded its board, and capped withdrawals at Rs 25,000 per depositor.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 of India, 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 protecting 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.

"Accordingly, after considering the Reserve Bank's request, the Central Government has imposed moratorium for thirty days effective from today," it said.

As per the moratorium order, Lakshmi Vilas Bank will not, without RBI's permission, "make, in the aggregate, payment to a depositor of a sum exceeding twenty-five thousand rupees lying to his credit, in any savings, current or any other deposit account, by whatever name called."

TN Manoharan, former non-executive chairman of Canara Bank, has been appointed as the administrator of the bank.

Meanwhile, the RBI has also placed in the public domain a draft scheme of amalgamation of Lakshmi Vilas Bank (LVB) with DBS Bank.

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Ex-World Bank economist says RBI's proposal to allow businesses into banking is 'good-looking' step in 'bad direction'
India

Ex-World Bank economist says RBI's proposal to allow businesses into banking is 'good-looking' step in 'bad direction'

Kaushik Basu added that there is a good reason that all successful economies have a clear line between industries and corporations on one hand, and banks and lending organisations on the other

RBI chief Shaktikanta Das says economic recovery 'stronger than expected', but warns of downside risk due to recent COVID-19 surge
India

RBI chief Shaktikanta Das says economic recovery 'stronger than expected', but warns of downside risk due to recent COVID-19 surge

The central bank which has introduced many unconventional measures to aid recovery apart from cutting key rates by 1.15 percent, expects the Indian economy to shrink by 9.5 percent in FY21

Raghuram Rajan and Viral Acharya slam RBI's proposal to let corporate houses set up banks
India

Raghuram Rajan and Viral Acharya slam RBI's proposal to let corporate houses set up banks

In a paper on LinkedIn, they said the proposal is "best left on the shelf" and that it is important to stick to the tried and tested limits on involvement of business houses in the banking sector