Lakshmi Vilas Bank moratorium ends on November 27; clients will switch to DBS Bank

The moratorium on Lakshmi Vilas Bank will be lifted on November 27, 2020 when the government today sanctioned the plan for the merger of Lakshmi Vilas Bank with DBS Bank India Ltd. All branches of Lakshmi Vilas Bank will function as branches of DBS Bank India with effect as of this date, RBI said. Clients, including Lakshmi Vilas Bank depositors, will be able to operate their accounts as clients of DBS Bank beginning November 27. The Reserve Bank further said that DBS Bank is making it necessary arrangements to ensure smooth service is provided to Lakshmi Vilas Bank customers.

The government had previously imposed, on the advice of the RBI, a 30-day moratorium on Lalskmi Vilas Bank, which was in crisis, restricting cash withdrawals to Rs 25,000 per depositor. In addition, the Reserve Bank replaced the bank’s board and appointed TN Manoharan, former non-executive chairman of Canara Bank, as administrator of the bank for 30 days.

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Speaking to the media, Manoharan assured that he is confident of reaching a resolution long before the moratorium ends on December 16. He added that the merger with DBS bank will immediately bring Rs 2.5 billion to the bank, which is not only aimed at the bank’s sustainability, but also taking it to the next level.

Meanwhile, the moratorium imposed on Lakshmi Vilas Bank had spooked the bank’s customers and they lined up to withdraw their hard-earned money from the bank. Depositors had withdrawn approximately 10 million rupees in one day. Manoharan had warned branches to brag as if this was a demonetization moment for the bank, as there could be friction and panic among customers over lack of proper communication.