The Union Cabinet, chaired by Prime Minister Narendra Modi on Wednesday gave its approval to the amalgamation of Lakshmi Vilas Bank Limited (LVB) with the wholly-owned subsidiary of Singapore based DBS Bank in India.
With this, there will no further restrictions on the depositors regarding the withdrawal of their deposits, Union Minister Prakash Javadekar said.
On November 17, the Reserve Bank of India had unveiled a draft scheme to amalgamate private sector lender LVB with DBS Bank India Ltd (DBIL). The decision followed soon after the RBI imposed a one-month moratorium on the private lender and capped deposit withdrawals at Rs 25,000. The step was taken on the advice of the RBI in view of the private sector bank's deteriorating financial health.
"The government has asked the Reserve Bank of India (RBI) to take action against the people in the management who drive banks to the brink of collapse," Javadekar said.
After inviting suggestions and complains from the public, RBI prepared the scheme for the bank's amalgamation. With the approval of the scheme, LVB will be amalgamated with DBIL from the appointed date, and with this, there will no further restrictions on the depositors regarding the withdrawal of their deposits.
The speedy amalgamation and resolution of the stress in LVB is in line with the Government's commitment to a clean banking system while protecting the interests of depositors and the public as well as the financial system.
DBS has been in India since 1994. In March 2019, to expand the franchise and build greater scale, DBS converted its India operations to a wholly-owned subsidiary, DBIL. It is present in 24 cities across 13 states as of now.
LVB has a 94-year old history in India, with established retail and small and medium enterprises customer base and a strong presence in south India.
The LVB was placed under an order of moratorium on November 17, 2020, which will be effective up to December 16, 2020, under section 45 of the Banking Regulation Act, 1949.
( With inputs from ANI )
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