Lakshmi Vilas Bank: Trading in Equity Shares to be suspended from tomorrow3 min read . Updated: 25 Nov 2020, 08:32 PM IST
- 'Equity shares of Lakshmi Vilas Bank Ltd shall not be available for trading from November 26,' said Bombay Stock Exchange
National Stock Exchange(NSE) today announced that the shares of Lakshmi Vilas Bank will be suspended from tomorrow for trading.
NSE said,"Members of the Exchange are hereby informed that the trading in Equity Shares of Lakshmi Vilas Bank Limited shall be suspended w.e.f. November 26, 2020 (i.e. closing hours of trading on November 25, 2020) on account of gazette notification dated November 25, 2020 issued by Department of Financial Services, Ministry of Finance."
"Equity shares of Lakshmi Vilas Bank Ltd shall not be available for trading from November 26," said Bombay Stock Exchange
Earlier, the Reserve Bank of India(RBI) has issued a press release today in which it said that Lakshmi Vilas Bank Ltd. branches will operate as DBS Bank India Ltd that the amalgamation will come into force from 27 November.
Customers, including depositors of the Lakshmi Vilas Bank Ltd. will be able to operate their accounts as customers of DBS Bank India Ltd. with effect from 27 November.
Consequently, the moratorium on the Lakshmi Vilas Bank Ltd. will cease to be operative from 27 November. DBS Bank India Ltd. is making necessary arrangements to ensure that service, as usual, is provided to the customers of the Lakshmi Vilas Bank Ltd.
The RBI had superseded LVB's board on November 17 after the private sector lender was placed under a moratorium. Meanwhile, the government issued a gazette notification which notified the Lakshmi Vilas Bank Limited (Amalgamation with DBS Bank India Limited) Scheme, 2020.
All employees of LVB shall continue in service and be deemed to have been appointed at the same remuneration and on the same terms and conditions of service as were applicable immediately before the close of business on November 17, 2020, the gazette notification issued by the Department of Financial Services said. Earlier in the day, the Union Cabinet approved the merger of LVB with DBIL, providing comfort to 20 lakh customers of the bank which was put under the moratorium. DBIL, a banking company licensed by RBI and operating in India through a wholly-owned subsidiary model, had a total regulatory capital of ₹7,109 crore as of June 2020. The parent company DBS, headquartered and listed in Singapore, is a leading financial services group in Asia with presence in 18 markets.
Although DBIL is well capitalised, it will bring in additional capital of ₹2,500 crore upfront to support credit growth of the merged entity. The government had earlier on November 17, on the advice of the RBI, imposed a 30-day moratorium on crisis-ridden LVB, restricting cash withdrawals at ₹25,000 per depositor.
The RBI simultaneously placed in public domain a draft scheme of amalgamation of LVB with DBIL. The combined balance sheet of DBIL would remain healthy even after amalgamation and its branches would increase to 600, a government release said on Wednesday. Started by a group of seven businessmen of Karur in Tamil Nadu under the leadership of V S N Ramalinga Chettiar in 1926, LVB has 566 branches and 918 ATMs spread across 19 states and one union territory. "The speedy amalgamation and resolution of the stress in LVB is in line with the government's commitment to a clean banking system while protecting the interests of depositors and the public as well as the financial system," the release said.
LVB is the second private sector bank after Yes Bank which ran into rough weather during this year. In March, capital-starved Yes Bank was placed under a moratorium. The government rescued Yes Bank by asking state-run State Bank of India (SBI) to infuse ₹7,250 crore and take 45 per cent stake in the bank. LVB's troubles started after it shifted its focus to lend to large businesses from SMEs. With soaring NPAs, the bank was put under the Prompt Corrective Action framework of the RBI in September 2019. The lender had sought the RBI's nod to amalgamate itself with Indiabulls Housing Finance and Indiabulls Commercial Credit in May 2019 to meet its capital requirements.
However, the deal could not get regulatory approval because of the RBI's aversion to let realty-focused entities into commercial banking. On June 15, 2020, LVB had signed a preliminary, non-binding letter of intent with Clix Capital Services and Clix Finance India for a possible amalgamation with the Clix Group. LVB posted a net loss of ₹836.04 crore in the year to March 2020. The bank had recorded a net loss of ₹396.99 crore during the second quarter ended September of this fiscal, which widened from ₹357.17 crore in the same quarter a year ago.
*With inputs from agencies