T N Manoharan, the RBI-appointed administrator of Lakshmi Vilas Bank, on Wednesday said that depositors' money is safe and expressed confidence of completing the lender's merger with DBS Bank India within the deadline set by the regulator.
On Tuesday, the Reserve Bank of India (RBI) appointed former non-executive chairman of Canara Bank T N Manoharan as the administrator of Lakshmi Vilas Bank after superseding the board of the crippled private sector lender.
A moratorium has been imposed on the bank and cash withdrawals have been capped at Rs 25,000 per account.
Talking to reporters, Manoharan said that he is confident of the timely merger of the bank with DBS Bank India before the December 16 deadline.
RBI will issue the final merger draft on November 20.
He said that his priority is to assure depositors that their money is safe and that the bank has enough liquidity to pay back the depositors.
"The top priority now is to ensure that the scheme of amalgamation is completed smoothly," according to Manoharan.
"There is no need to panic. Our priority is to protect the interest of depositors and revitalise the bank through amalgamation," he said in his first presser after taking charge.
He said that in order to regenerate confidence among the bank's employees, it is essential that their interests are taken care of under the amalgamation plan. Their remuneration and employment contracts will continue as before, he reassured.
He claimed to have also sent across communication to the employees earlier in the day, assuring about the safety of their jobs.
The lender has some 4,100 staff across 563 branches. He also said that the inquiry into the governance lapses would pick up steam after the amalgamation is done.
"The law will take its own course. It would be in focus only after the amalgamation has taken place," he said.
He said that the priority is to help customers to be able to withdraw within the permissible limits. RBI has approved that withdrawals of up to Rs 5 lakh in emergency situations. The bank has about 20 lakh depositors as of date.
The new management will have to take up further issues with the bank's operations and decide on how to resolve them.
Manoharan said that the Banking Regulations Act will supersede the Companies Act in this situation and shareholders' nod will not be required to list the shares.
"LVB has been going through testing times. We are confident the resolution will be in place before the deadline of December 16," Manoharan said, adding that decline in asset quality, high slippages were responsible for Q2 loss.
He added that deposits marginally dropped to about Rs 20,050 crore from Rs 20,973 crore at the end of September, while advances were up marginally to Rs 17,000 crore from Rs 16,620 crore.