Lakshmi Vilas Bank branches will open and operate as DBS Bank India from Friday (Nov 27), the Reserve Bank of India said in a press release. Accordingly, the freeze on withdrawals from Lakshmi Vilas Bank’s account will also cease to exist, the RBI said.
“Clients, including depositors of Lakshmi Vilas Bank Ltd. will be able to operate their accounts as clients of DBS Bank India Ltd. effective November 27, 2020,” said RBI.
“DBS Bank India is making the necessary arrangements to ensure that the service, as usual, is provided to the clients of Lakshmi Vilas Bank,” added RBI.
The RBI move came after the Union cabinet headed by Prime Minister Narendra Modi approved the merger of Lakshmi Vilas Bank (LVB) with DBS India, which is the wholly owned subsidiary of DBS Bank Singapore.
“The rapid merger and resolution of stress at LVB is in line with the government’s commitment to a clean banking system, while protecting the interests of depositors, the public and the financial system,” said Union Minister Prakash Javadekar, at a press conference at the end of the cabinet meeting. With the merger, there will be no more restrictions for depositors regarding withdrawal of their deposit, the minister added.
As part of the merger plan, DBS India will inject Rs 2500 crore fresh capital into LVB and all share capital, reserves and surplus will be canceled.
The Reserve Bank of India had proposed on November 17 to merge the troubled 94-year-old lender with DBS India. On the same day, it had placed LVB under a moratorium for a month and limited withdrawals from its clients’ accounts to 25,000 rupees a month.
The Reserve Bank also replaced LVB’s board of directors and appointed TN Manoharan, former non-executive chairman of Canara Bank, as administrator of the bank for 30 days.
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