Have enough funds to meet deposit withdrawals, says LVB admin2 min read . Updated: 18 Nov 2020, 05:27 PM IST
- The bank has deposits of ₹20,050 crore at present, down from ₹20,973 crore at the end of the September quarter. That apart, depositors have withdrawn ₹10 crore since the merger was announced last evening.
MUMBAI : Assuring depositors of enough liquidity, the newly-appointed administrator of Lakshmi Vilas Bank on Wednesd said the bank will be able to meet demand for funds and is recalibrating its systems accordingly.
“As far as liquidity is concerned, enough care is taken," said T.N. Manoharan, LVB’s administrator and a former non-executive chairman of Canara Bank.
“Lakshmi Vilas Bank also is monitoring closely the availability of cash in the currency chest as well as coordinating with the regulator in an appropriate manner to ensure that at no outlet there is any shortage of currency even if a significant number of depositors turn up to withdraw the permissible amount."
He explained that the bank is recalibrating its software to factor in the withdrawal cap and said that hopefully things will be in place by Thursday morning.
As of now, we have not sought (additional liquidity from RBI), but the point is that we are confident we can meet the requirement for the depositors’ withdrawals by the bank itself and wherever required, we have the backing of the regulator to ensure that there is no deficit or shortfall on that account, said Manoharan.
The Reserve Bank of India (RBI) on Tuesday seized control of LVB and forced a merger with the local unit of Singapore’s largest lender DBS Bank. As part of the process, deposit withdrawals have been capped at ₹25,000 at LVB in the moratorium period, effective up to 16 December.
“In the moratorium period, the business is at a standstill...The facility of withdrawals is being restored in a phased manner. The ATMs will start operating, the branches will start releasing the cash. All the things are being put in place," said Manoharan.
The bank has deposits of ₹20,050 crore at present, down from ₹20,973 crore at the end of the September quarter. That apart, depositors have withdrawn ₹10 crore since the merger was announced last evening.
Manoharan said that employees have nothing to be concerned about because the scheme of amalgamation is such that the employees’ interest is also taken care of.
“All the employees of Lakshmi Vilas Bank shall continue in service and will be deemed to have been appointed in the transferee bank (DBS Bank India Ltd) at the same remuneration and on the same terms and conditions," he said.
Asked if the deposit cap could be relaxed before the moratorium ends, he said lifting of the moratorium and restoration of the normal flow of operations will be coterminous.
Meanwhile, rating agency Moody’s said on Wednesday that the merger will strengthen DBS’s business position in India by adding new retail and small and medium-sized customers.
“We estimate that DBS India's customer deposits and net loans will increase by about 50%-70% following the merger. LVB will also add around 500 branches to DBS India's 27 branches. India is one of DBS’s priority markets, and the acquisition of LVB fits DBS’s expansion strategy," it said.
Not everyone is pleased though. All India Bank Employees’ Association (AIBEA) said in a statement that this announcement has come as a shock to the bank customers and general public.
“This will create panic and doubt in the minds of people about the stability and dependability of Banks because people keep their hard-earned savings in the Banks. RBI which is responsible to maintain the stability of the banks and financial sector cannot escape its responsibility for not taking timely action," said C.H. Venkatachalam, general secretary of AIEBA.