A recent event in the banking sector has been making news and it is all because the Reserve Bank of India (RBI) has chosen to exclude themselves from the financial distress being faced by the Chennai-based Lakshmi Vilas Bank. The latter has reportedly compiled a series of bad loans, government-related discrepancies and has been having issues securing capital which has led to the country’s central bank proposing a merger between the DBS group’s Indian subsidiary and the Lakshmi Vilas Bank.
The DBS group is a Singapore based company which has been approved to engage in a
merger with the Lakshmi Vilas Bank. The group has reportedly decided to invest
25 billion dollars into its Indian subsidiary to aid with the merger. However,
keeping the monetary aspects aside, there has been a lot of speculation and
questions regarding the cultural shift in the management. The companies hail
from a very different work environment given the management was handled by their own working ethics and rules. Therefore, it will be an interesting
development to keep track of in the future of how it holds itself and hoe the
4000 employees react to this new change.
The All India Bank Employees’ Association has raised its grievances towards this merger as they believe that handing over the bank to a foreign group may not be in the best interest of the employees and it should be handed over to a public sector lender instead.
Both the companies involved have not spoken about this issue yet.
The Lakshmi Vilas Bank has well over 550 branches and 900+ ATMs in the country while the DBS group has just around 30 branches since it’s entering the country in 1994. The DBS group has been one of the largest lenders in Southeast Asia for a long time and if this merger is a successful business investment, they will establish a strong grip over the lending industry in India as well.
Related News: SUPREME COURT AND LOAN MORATORIUM