“The amalgamation will come into force on the appointed date i.e. November 27, 2020. All the branches of the Lakshmi Vilas Bank will function as branches of DBS Bank India with effect from this date,” an RBI statement said.
It said that the customers, including depositors of the Lakshmi Vilas Bank will be able to operate their accounts as customers of DBS Bank India with effect from November 27, 2020.
No moratorium after Nov 27
Consequently the moratorium on the Lakshmi Vilas Bank will cease to be operative from that date. DBS Bank India is making necessary arrangements to ensure that service, as usual, is provided to the customers of the Lakshmi Vilas Bank.
RBI last week announced the merger of LVB with the wholly-owned subsidiary of DBS Bank in India, a surprise move, which was preceded by the imposition of a one-month moratorium on the private sector bank with a capping of deposit withdrawal at Rs25,000.
LVB is the third bank after Punjab and& Maharashtra Co-operative (PMC) Bank and Yes Bank that had gone under a moratorium in the recent past.
The ‘white knight’, DBS Bank India Ltd (DBIL) that came through RBI, is a wholly owned subsidiary of DBS Bank Ltd, a Singapore bank, which in turn is a subsidiary of Asia’s leading financial services group, DBS Group Holdings Ltd.
Capital starved bank
LVB has been literally struggling to keep its head above water with the capital adequacy ratio (CAR) having fallen to -2.85, very rare for any bank in India.
The bank that had been under RBI’s prompt corrective action (PCA) since September 2019, has last month received an indicative non-binding offer from Clix Group for merger, which the market then believed would end up on a positive note.