RSS’s Swadeshi Jagaran Manch opposes proposed LVB-DBS Bank India merger1 min read . Updated: 24 Nov 2020, 09:08 PM IST
- In a letter addressed to the RBI governor, SJM said that the proposed scheme of amalgamation is not transparent
- The development comes in the backdrop of the banking regulator on 17 November announcing a draft scheme for the merger of LVB with DBS Bank India
NEW DELHI: Swadeshi Jagaran Manch, a sister organization of the Rashtriya Swayamsevak Sangh (RSS) has opposed the Reserve Bank of India’s (RBI’s) draft scheme for the merger of beleaguered Lakshmi Vilas Bank (LVB) with the wholly-owned subsidiary of Singapore-based DBS Bank in India. It has also urged the banking regulator to re-examine the proposed deal.
In a letter addressed to the RBI governor Shaktikanta Das, Swadeshi Jagaran Manch (SJM) said that the proposed scheme of amalgamation is not transparent and is a ‘back-door entry to a foreign banking entity into the Indian market’.
“While the Swadeshi Jagaran Manch appreciates the intent of the RBI to protect the depositors’ in LVB, we believe the same end could be achieved without compromising national interests. The proposal is not transparent and it appears to be circumventing RBI’s own practices till now, casting a shadow on the fair name of the Reserve Bank of India," it said in a letter. Mint has seen the copy of the letter.
The development comes in the backdrop of the banking regulator on 17 November announcing a draft scheme for the merger of LVB with DBS Bank India, soon after the government imposed a one-month moratorium on the private lender and capped deposit withdrawals at ₹25,000. The merger is expected to not only rescue the capital-starved LVB, but also strengthen DBS’s business position in India.
“This is clearly a back-door entry to a foreign banking entity into the Indian market, overlooking many of RBI’s own rules in branch expansion of foreign banks. As the RBI knows, the LVB branch network is larger than the branch network of all foreign banks combined in the country," SJM’s national co convenor Ashwani Mahajan said in the letter.
An ideal resolution for any distressed commercial entity should entail a comprehensive valuation exercise, transparent invitation of bids from interested parties and final decision involving key stake holders that maximizes the value, SJM said, alleging that RBI has not followed due process in this case.
“We request the RBI to be transparent in this matter and to re-examine the proposed LVB merger with DBS. We are confident that the RBI will find a wholly Indian solution to this issue, protect the interests of depositors and bring LVB back to being the strong community institution that it has always been," it said.