Updated: November 25, 2020 8:54:42 pm
Nearly a week after Lakshmi Vilas Bank (LVB) was put under a 30-day moratorium by the Reserve Bank of India (RBI), the Union Cabinet headed by Prime Minister Narendra Modi on Wednesday approved the scheme of amalgamation of the Chennai-based bank with DBS Bank India Limited (DBIL).
With this there will no further restrictions on the depositors regarding the withdrawal of their deposits, Union Minister Prakash Javadekar informed in the briefing to the reporters.
“The decision will benefit over 20 lakh depositors with deposits of around Rs 20,000 crore and 4,000 employees of LVB. The depositors now don’t need to run to the bank as they are being amalgamated into a bank which has a good balance sheet, good capital adequacy and international presence,” the minister said.
Javadekar said that those responsible for the deteriorating financial health of the LVB would be penalised and there will be an improvement in overall oversight so that such cases don’t get repeated.
Meanwhile, the Reserve Bank said today that the amalgamation of Lakshmi Vilas Bank with DBS Bank India will come into force from November 27 and the moratorium imposed on the crisis-ridden lender will be removed on that day.
Earlier on November 17, the central bank had imposed a 30-day moratorium on the struggling lender, superseded its board of directors, and announced a draft scheme for the amalgamation of LVB with DBIL, a subsidiary of DBS of Singapore.
Subsequently, the RBI also restricted withdrawals by depositors at Rs 25,000 from savings and current accounts, and expenditure on any item at Rs 50,000 per month.
“With the approval of the scheme, LVB will be amalgamated with DBIL from the appointed date, and with this there will no further restrictions on the depositors regarding withdrawal of their deposits,” the government said in its press release.
Also read our Editorial | Rescuing the bank
LVB is the second private sector lender this year after Yes Bank which has run into rough weather. In March, cash-starved Yes Bank was placed under a moratorium. The government rescued Yes Bank by asking state-run State Bank of India to infuse Rs 7,250 crore and take 45 per cent stake in the private bank.
Rs 6,000 crore infustion in NIIF debt platform
Apart from the LVB decision, the Cabinet approved an equity infusion of Rs 6,000 crore in the NIIF Debt Platform sponsored by National Investment and Infrastructure Fund (NIIF), comprising of Aseem Infrastructure Finance Limited (AIFL) and NIIF Infrastructure Finance Limited (NIIF-IFL).
To support the funding of the National Infrastructure Pipeline of Rs 111 lakh crore, Sitharaman in her Budget speech this year had said that about Rs 22,000 crore has already been provided. This would be towards equity support to infrastructure finance companies such as India Infrastructure Finance Company Ltd (IIFCL) and a subsidiary of NIIF, the minister had said.
Rs 2,480 crore FDI in ATC Telecom
The Cabinet Committee on Economic Affairs(CCEA) has approved the FDI proposal of Rs 2,480.92 crore by ATC Asia Pacific PTE Limited for purchasing 12.32 per cent stock of ATC Telecom Infrastructure Private Limited, Javadekar informed.
“Today, CCEA allowed FDI by ATC Asia Pacific Ltd to the tune of Rs 2,480 crore, for purchasing 12 per cent stock of ATC Telecom,” the minister said.
The investment underlines the growing confidence of investors in India’s telecom sector and its infrastructure, he said.
With the approval from the CCEA, the cumulative FDI of ATC Asia Pacific into ATC Telecom would be Rs 5,417.2 crore in financial years 2018-19 to 2020-21, the government release said.
— with inputs from PTI
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