New Delhi, November 18: The central government, on Tuesday, announced that the Lakshmi Vilas Bank  (LVB) has been brought under moratorium, effective from 6 pm on November 17 till December 16. It was also restricted the withdrawal of more than Rs 25, 000 per borrower during this period. The account holders can, however, withdraw above this limit for unexpected expenses, including medical treatment, education etc,. RBI has assured the depositors of LVB that their interested will be protected and asked them not to panic.

The Reserve Bank of India had submitted an application to the Centre under Section 45 of the Banking Regulation Act  1949, seeking to impose moratorium on  the LVB. "The rapidly deteriorating financial position of Lakshmi Vilas Bank relating to liquidity, capital and other critical parameters, and the absence of any credible plan for infusion of capital has necessitated Reserve Bank of India to take immediate action in public interest and particularly in the interest of the depositors," said the apex bank. India News | Lakshmi Vilas Bank Placed Under Moratorium, Withdrawals Capped at Rs 25,000.

RBI has also announced a draft scheme for the amalgamation of LVB with DBS Bank India Ltd. (BDIL), a subsidiary of DBS Group Holdings Limited and added, "DBIL has a healthy balance sheet, with strong capital support." RBI also said that it has superseded the Board of Directors of LVB for a period of 30 days owing to serious deterioration in the financial position of the bank and that this has been done to protect the depositors’ interest. Lakshmi Vilas Bank Cash Withdrawal Limit Capped at Rs 25,000 Till December 16.

In its draft scheme, RBI has proposed, "Rights and liabilities of the members and creditors of the transferor bank (1) On and from the appointed date, the entire amount of the paid-up share capital and reserves and surplus, including the balances in the share/securities premium account of the transferor bank, shall stand written off. (2) On and from the Appointed date, the transferor bank shall cease to exist by operation of the scheme, and its shares or debentures listed in any stock exchange shall stand delisted without any further action from the transferor bank, transferee bank or order from any authority.”

It has also asked for suggestions or objections, in any, from the depositors and creditors of LVB and DBIL on the proposed amalgamation.  The suggestions and objections will be received by Reserve Bank up to 5 pm on November 20, 2020

(The above story first appeared on LatestLY on Nov 18, 2020 10:33 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).