Lakshmi Vilas Bank Has Enough Liquidity to Pay Back Depositors, Says RBI-appointed Administrator

New Delhi: In a ray of hope for thousands of depositors, RBI-appointed administrator for Lakshmi Vilas Bank TN Manoharan on Wednesday said that the bank has enough liquidity to pay back depositors. Also Read – Under Moratorium, Lakshmi Vilas Bank Faces Equity Wipeout, Fate of Investors Hangs in Balance

A day after his new appointment, Manoharan said the top priority for him at this time is to assure Lakshmi Vilas Bank depositors that their money is safe in the bank. Also Read – Lakshmi Vilas Bank Put Under Moratorium, Withdrawal Limited to Rs25000

The development comes a day after the Reserve Bank also superseded the board of Lakshmi Vilas Bank (LVB) and appointed TN Manoharan, former non-executive chairman of Canara Bank, as its administrator for 30 days. Also Read – RBI Says India in Historic Technical Recession For First Time; July-Sept GDP to Contract 8.6%

He further added that Lakshmi Vilas Bank has Rs 20,000 crore in deposits and Rs 17,000 crore in advances. He also expressed confidence of timely merger of Lakshmi Vilas Bank with DBS India.

The Central government on Tuesday imposed a 30-day moratorium on Lakshmi Vilas Bank, restricting cash withdrawals at Rs 25,000 per depositor, and simultaneously announced a scheme to merge the cash-strapped lender with DBS India.

The step was taken on the advice of the Reserve Bank in view of the private sector bank’s deteriorating financial health. The RBI placed in the public domain a draft scheme of amalgamation of LVB with DBS Bank India Ltd (DBIL).

The DBS Bank India, in a statement, said the proposed amalgamation will provide stability and better prospects to LVB’s depositors, customers and employees.

“To support the amalgamation, DBS will inject Rs 2,500 crore (SGD 463 million) into DBIL if the scheme is approved. This will be fully funded from DBS’ existing resources,” it said.

LVB is the second private sector bank after Yes Bank which has run into rough weather during this year.

In March, capital-starved Yes Bank was placed under a moratorium. The government rescued it by asking state-run SBI to infuse Rs 7,250 crore and take 45 per cent stake in the bank.

The Department of Financial Services, in a gazette notification, said LVB “shall not, without the permission in writing of the Reserve Bank of India, make, in the aggregate, payment to a depositor of a sum exceeding Rs 25,000 lying to his credit, in any savings, current or any other deposit account” during the moratorium period up to December 16, 2020.

However, the bank can make payment in excess of Rs 25,000 to meet unforeseen expenses in connection with medical treatment of a depositor or any dependent person, or towards the cost of higher education of the person/dependants.