Centre approves merger of Lakshmi Vilas Bank with DBS India
The Union Cabinet has approved the merger of the LVB with DBS Bank India Limited, Union minister Prakash Javadekar told reporters, adding the decision will provide comfort to 20 lakh depositors and protect the services of 4,000 employees. The step was taken on the advice of the Reserve Bank of India (RBI), in view of the declining financial health of the private sector lender. “The speedy amalgamation and resolution of the stress in LVB is in line with Government’s commitment to a clean banking system while protecting the interests of depositors, public and financial system,” the union minister Prakash Javadekar said in a media briefing at the end of the cabinet meeting. With the merger, there will no further restrictions on the depositors regarding the withdrawal of their deposit, the minister added.
As part of the amalgamation plan, DBS India will infuse fresh capital of Rs 2,500 crore into LVB and the entire share capital and reserves and the surplus will be written off. The RBI has resorted to forced mergers in the past. The central bank had announced a scheme of amalgamation for IDBI-United Western merger in September 2006 and the merger of Global Trust Bank with Oriental Bank of Commerce in the year 2004. This is, however, the first time the central bank has tasked a bank with a foreign parent to revive an ailing private lender. The Reserve Bank of India, on November 17, had proposed the merger of the 94-year-old beleaguered lender with DBS India.
News Desk, Ne India News