The Union Cabinet on Wednesday approved the merger of crisis-hit private lender Lakshmi Vilas Bank with DBS Bank India, days after the Reserve Bank of India proposed the amalgamation. The central bank’s proposal had come after it put Lakshmi Vilas Bank under moratorium for a period of one month on November 17, citing “serious deterioration in the financial position” of the bank. Withdrawals for depositors of the bank were capped at Rs 25,000.
In an official release, the government said that the restrictions on the withdrawal of deposits have also been lifted following approval to the merger.
A gazette notification issued by the finance ministry said that the merger will come into effect on November 27 and that all employees of the Lakshmi Vilas Bank will continue their service under DBS Bank India.
Union Information and Broadcasting Minister Prakash Javadekar announced the government’s approval, while briefing the media about decisions taken during a Cabinet meeting held earlier during the day.
The government in its release said that DBS Bank India “has a strong balance-sheet, with strong capital support and it has the advantage of a strong parentage of DBS, a leading financial services group in Asia.”
As part of the merger, DBS Bank India will infuse fresh capital of Rs 2,500 crore into Lakshmi Vilas Bank, reported Mint. Shares of Lakshmi Vilas Bank rose 4.79% on Wednesday, to close at Rs 7.65 on the BSE.
Limited-time offer: Big stories, small price. Keep independent media alive. Become a Scroll member today!
Our journalism is for everyone. But you can get special privileges by buying an annual Scroll Membership. Sign up today!