Laxmi Vilas Bank is all set to be amalgamated into Singapore-based DBS bank India, a unit of Southeast Asia’s largest lender, DBS. It is an approved RBI plan which has been taken into consideration the retrogradation of its finances. This merger will be put into effect taking any citations or objections until 5:00 PM on Friday and a stand on it will be taken henceforth.
Here is all we need you to know about the RBI’s plan to rescue Lakshmi Vilas Bank:
The well-put capitalized DBS Bank India which has a market value of $47 billion is set to bring an additional capital of 2,500 crore upfront to support the merged LVS bank. This is all in lieu of seeking a hefty expansion for the Singapore based Bank in India. It comes to an immediate deliverance and a major respite for the Chennai based Bank as it has a mounting amount of non-performing assets (NPA’s) and governance issues. This merger will help to transform DBS from only a lender to a digitized platform that would own hundreds of branches.
DBS currently has only 30 branches in India, while Laxmi Vilas Bank has more than 550 and 900 plus ATMs.
This merger has got the general public into questioning and lately they have expressed scepticism on the merger with DBS bank. The All India Bank Employees Association (AIBEA) accounts for over half a million bank employees, protested against the merger, and deemed to be amalgamated with a public sector lender (PSU) instead.
A group of Laxmi Vilas Bank and India Bulls Housing Finance promoters filed petitions challenging the merger, the latter being a major shareholder of Laxmi Vilas Bank. According to the plan, the entire paid-up equity capital of Laxmi Vilas Bank will be written off resulting in shareholders losing their investment.
This is the second private sector bank to run into a rough patch after Yes Bank citing an economic downfall of India’s growth.