RBI may push Lakshmi Vilas Bank to merge with Clix Capital

Shareholders of Lakshmi Vilas Bank (LVB) on Friday rejected the reappointment of seven directors, including the managing director and chief executive. The decision may force the Reserve Bank of India (RBI) to step in and hasten the deal with Clix Capital or looking for other bidders for the bank.

On Sunday, the RBI approved the formation of a committee of three independent directors — Meeta Makhan, Shakti Sinha and Satish Kumar Kalra — to manage the day-to-day affairs of the bank.

Also read — LVB to raise Rs 1,500 crore to fund business growth; increase foreign shareholding

“With Liquidity Coverage Ratio (LCR) of about 262 per cent as on September 27, 2020, against minimum 100 per cent required by RBI, the deposit-holders, bond-holders, account-holders and creditors are well safeguarded,” the bank stated in a press release.

To meet its capital requirements, LVB had sought the RBI's approval to amalgamate Indiabulls Housing Finance and Indiabulls Commercial Credit Ltd in May 2019. It, however, could not get a regulatory nod for the amalgamation plan.

The lender in June 2020 inked a non-binding agreement with Clix Capital Services Private Limited (Clix Capital) and Clix Finance India Private Limited (Clix Finance) (collectively the Clix Group) for the proposed amalgamation of Clix Group with the bank for an estimated value of Rs 1,900 crore.

LVB, in a press statement, said that it will continue the process of considering and evaluating the proposed amalgamation of the "Clix Group" and added that the “mutual due diligence is substantially complete.”

Recently, two former employees of LVB were arrested for their alleged involvement in misappropriation of fixed deposit receipts worth Rs 729 crore of Religare Finvest Limited.

(With agency inputs)