The moratorium on withdrawals from Lakshmi Vilas Bank (LVB) has been lifted as the government has approved its merger with DBS Bank India. On Wednesday, the cabinet approved the scheme of amalgamation of the embattled private lender with the Indian arm of Singapore-based DBS Bank. The merger will take effect from November 27. All paid-up share capital and reserves and surplus of the bank has been written off.
"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 government said in a statement.
After inviting suggestions and objections from the public and stakeholders, RBI prepared and provided a scheme for the bank's amalgamation for the Government's sanction, well in advance of the end of the period of moratorium so that restrictions on withdrawal faced by the depositors are minimized, it added.
The deposit book of Lakshmi Vilas Bank on November 17, when the moratorium was placed, stood at Rs 20,500 crore. The bank serves about 20 lakh depositors.
According to the draft amalgamation plan, all the equity value of the LVB shareholders would be written down, while DBS Bank will pay interest on deposits at the existing LVB rate until the merger date.
(Published 25 November 2020, 09:59 IST)
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