The Lakshmi Vilas Bank’s issues had been stew for quite a long time now. It reported a net loss of Rs 397 crore in the September quarter of FY21, as against a loss of Rs 112 crore in the June quarter.
The central government on Tuesday set the Tamil Nadu-based private sector lender Lakshmi Vilas Bank under a ban, limiting withdrawals from its customer’s account at Rs 25000 a month, said the Ministry of finance in a statement. However, depositors could withdraw more than Rs 25,000 with permission from the Reserve Bank of India for medical operations, wedding functions, payment of higher education loans, and specific purposes, the ministry said.
The government took a step considering RBI’s advice in the scenario of the bank’s declining financial condition.
RBI in a distinguished statement also mentioned the unavailability of credibility to revive, there was no alternative but to apply to the central government for banning under Section 45 of the banking regulation act, 1949 to safeguard the interest of its depositors by ensuring the financial balance.
Laxmi Vilas Bank shares rated 1 percent less at Rs 15.50 apiece on BSE before on Tuesday.
Laxmi Vilas Bank due to its worse financial condition and assets statement is struggling to find a buyer for a year now. It was reportedly with Clix Capital for capital leaven.
The setbacks began in 2019 since RBI rejected the proposal for its merger with Indian Bulls Housing finance. The RBI has been continually touching with the bank’s management for way increase the funds to manage with capital adequacy norms. Bank management has singled out the Central Bank that it was engaging with some investors. However, flunk to submit any concrete offer to the RBI non banking the financial position through amalgamation with the banking financial companies has already appeared to reach the dead end.