Reserve Bank of India placed Lakshmi Vilas Bank(LVB) under a one-month moratorium period till December 16, 2020. The move was notified by the Ministry of Finance through an order.
The central bank also proposed the merger of LVB with DBS Bank India Ltd which would bring Rs 2,500 crore in additional capital to support credit growth.
Under the month-long moratorium, the bank cannot make payments of over Rs 25,000 to creditors without approval from RBI, which means if you have a deposit, you can withdraw a maximum of Rs 25,000 only for a month after which, you can withdraw any amount from your LVB account.
Since the RBI has already put forth a plan to amalgamate the bank with DBS Bank, this reduces uncertainty for depositors. Furthermore, the RBI has said that depositors of LVB need not be worried as their interest will be paid in full.
After the proposed merger, LVB customers will become customers of DBS Bank with nature of accounts, fixed deposits remaining the same. DBS Bank will pay interest on your deposits at the current rate offered by LVB until the date of the merger, after which DBS will continue paying interest at the then prevailing rates for similar accounts in the bank.
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