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Lakshmi Vilas Bank shares tank 20% as RBI imposes a 30-day moratorium

Lakshmi Vilas Bank shares crashed 20 per cent to Rs 12.40 per share on the BSE in the early trade on Wednesday, while on National Stock Exchange (NSE) it declined 19.94 per cent to Rs 12.45 apiece.

By: Express Web Desk | New Delhi | Updated: November 18, 2020 10:11:08 am
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Shares of Lakshmi Vilas Bank (LVB) were locked in the 20 per cent lower circuit at Rs 12.40 a piece on the BSE a day after the Reserve Bank of India (RBI) imposed a 30-day moratorium on struggling lender, superseded its board of directors and announced a draft scheme for the amalgamation of the bank with DBS Bank India, a subsidiary of DBS of Singapore, in the wake of “serious deterioration in the financial position of the bank”.

On the National Stock Exchange (NSE), the stock was locked at Rs 12.45, down 19.94 per cent from its previous close.

The moratorium will be effective upto December 16, 2020, the RBI said in its statement.

The central bank has 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. The RBI said the financial position of the Chennai-based lender has undergone a steady decline with the bank incurring continuous losses over the last three years, eroding its net worth.

LVB has a network of 563 branches and deposits of Rs 20,973 crore.

RBI has also appointed TN Manoharan, former Non-Executive Chairman of Canara Bank, as the Administrator under Section 36ACA(2) of the Banking Regulation Act, 1949 with effect from Tuesday, the lender said in an exchange filing to the BSE.

In its statement, the RBI said that DBS Bank India will bring in additional capital of Rs 2,500 crore upfront, to support credit growth of the merged entity.

“Owing to comfortable level of capital, the combined balance sheet of DBIL would remain healthy after the proposed amalgamation, with CRAR at 12.51 per cent and CET-1 capital at 9.61 per cent, without taking into account the infusion of additional capital,” the central bank said.

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