LVB to function as DBS Bank from Nov 27, moratorium to be lifted: RBI

The Reserve Bank of India has said that the merger of Lakshmi Vilas Bank with DBS Bank India will come into force from November 27 (Friday). Also, the moratorium imposed on the cash-starved lender will be removed from the same day, the banking regulator said on Wednesday (November 25).

The banking regulator had earlier imposed a one-month moratorium on the private lender and had capped deposit withdrawals at ₹25,000.

Also read:In 2018, RBI rejected DBS’s bid for 50% stakes in Lakshmi Vilas Bank

“The amalgamation will come into force on the appointed date ie, November 27, 2020. All the branches of the Lakshmi Vilas Bank Ltd will function as branches of DBS Bank India Ltd with effect from this date,” the RBI said.

The statement came after the Union cabinet gave the green signal to the proposed amalgamation of Lakshmi Vilas Bank with the wholly-owned subsidiary of Singapore-based DBS Bank in India.

Customers, including depositors of the Lakshmi Vilas Bank, will be able to operate their accounts as customers of DBS Bank India with effect from November 27.

“Consequently the moratorium on the Lakshmi Vilas Bank Ltd will cease to be operative from that date,” the central bank said.

Also read:Lakshmi Vilas Bank’s collapse highlights lack of RBI supervision

On November 17, the RBI had unveiled a draft scheme to amalgamate private sector lender Lakshmi Vilas Bank with DBS Bank India (DBIL). The step was taken in view of the private sector bank’s deteriorating financial health.

“RBI has taken a very judicious step to save the depositors and mitigate unwanted disruption. This will strengthen the confidence of the depositors and alleviate the disruption in the banking system,” said Abir Lal Dey, Partner, L&L Partners.

“The cabinet approval to RBI’s proposal to merge Lakshmi Vilas Bank with DBS Bank comes as a welcome move and a win-win for both DBS Bank with the bank now getting an increased customer outreach and its assets and LVB’s customers”, said Sameer Jain, founder and managing partner, PSL Advocates & Solicitors.

All employees of LVB shall continue in service and be deemed to have been appointed at the same remuneration and on the same terms and conditions of service as were applicable immediately before the close of business on 17 November, the gazette notification issued by the Department of Financial Services said.