Mumbai, September 28: The Reserve Bank of India (RBI) has initiated prompt corrective action for the troubled Lakshmi Vilas Bank (LVB), a day after the private lender said that the Economic Offences Wing of Delhi Police is probing allegations of cheating and criminal breach of trust against its directors of the board.

"The RBI has also advised the bank on restrictions put in place and the actions to be taken. The bank has taken note of for necessary compliance with progress to be reported on a monthly basis to RBI," LVB said in regulatory filings to stock exchanges on Friday after midnight. It said the RBI's crackdown was on account high net non-performing assets, insufficient capital to risk-weighted assets ratio (CRAR) and common equity tier 1 (CET1) and negative return on assets (RoA) for two consecutive years and high leverage based on on-site inspection under the risk-based supervision carried out for the year ended March 31. PMC Bank Crisis: RBI Rejects Reports of Closing Down Commercial Banks As Customers Panic.

"The prompt corrective action is aimed at improving the performance of the bank and will not have any adverse impact on the normal day-to-day operations, including acceptance or repayment of deposits in the normal course," the LVB said.

On Friday, shares of LVB closed 4.94 per cent lower at Rs 36.55 apiece after the bank said that Economic Offences Wing of Delhi Police has registered a first information report (FIR) against its directors of the board. The FIR was registered under complaint for offences of cheating, criminal breach of trust by banker, criminal misappropriation and criminal conspiracy under the Indian Penal Code 1860.

"The FIR is based on a complaint filed by Religare Finvest Ltd (RFL) pertaining to adjustment of their deposits to the dues of RHC Holding Pvt Ltd and Ranchem Pvt Ltd. The same was received at bank's end on September 25," LVB said adding that it is considering appropriate legal measures to counter the same.RFL has accused LVB of misappropriating Rs 790 crore it kept with the bank as a fixed deposit.

Established in 1926, LVB is one of the old private sector banks based out of Tamil Nadu. As on March 31, its net advances stood at Rs 20,103 crore and deposits at Rs 29,279 crores. The bank's board of directors has approved the scheme of amalgamation to effect its merger with lndiabulls Housing Finance Ltd and its wholly-owned subsidiary lndiabulls Commercial Credit Ltd. The scheme is subject to regulatory and shareholders' approval.

Meanwhile, the Delhi High Court on Friday sought the response of the Centre and the RBI on a plea seeking a Special Investigation Team (SIT) probe into the alleged illegalities, siphoning off funds and violations committed by the promoters of Indiabulls Housing Finance.LVB's rating has been constrained by its moderate size, regional nature of operations, weak asset quality parameters and weak capitalisation levels.

The police investigation comes at a time when the banking sector has been roiled by defaults from housing finance companies and the RBI took charge of Punjab and Maharashtra Cooperative (PMC) Bank earlier this week.