All the branches of LVB will function as branches of DBIL with effect from November 27, the RBI said in a statement
Crisis-hit Lakshmi Vilas Bank (LVB) will merge into the Indian arm of Singapore-based DBS Bank on November 27, leading to removal of all restrictions, including withdrawal cap of ₹25,000, which the RBI had placed on the lender earlier this month.
The RBI notified the effective date of merger soon after the Union Cabinet headed by Prime Minister Narendra Modi approved the Scheme of Amalgamation of LVB with DBS Bank India Ltd. (DBIL).
All the branches of LVB will function as branches of DBIL with effect from November 27, the Reserve Bank of India (RBI) said in a statement.
“Customers, including depositors of the Lakshmi Vilas Bank Ltd will be able to operate their accounts as customers of DBS Bank India Ltd. [DBIL] with effect from November 27, 2020. Consequently the moratorium on the Lakshmi Vilas Bank Ltd. will cease to be operative from that date,” it said.
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DBIL is making necessary arrangements to ensure that service, as usual, is provided to customers of LVB, the central bank added.
The RBI had superseded LVB’s board on November 17 after the private sector lender was placed under a moratorium.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.
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