It is in the news that the Lakshmi Vilas bank will be overtaken by the DBS Bank India limited (DBIL). The reason behind this move is that RBI has proposed to bail out. The Lakshmi Vilas bank has been facing your financial ups and downs due to which this decision has been taken.
This could be a playbook for or the banks in disaster in the near future. However, bondholders, depositors, issuers will get the money back as a part of this move. However, the scenario for shareholders c made worse considering the equity shareholders have faced complete drastic losses due to this announcement.
This 94 your old institution is now brought down on curtains. Apparently, the CEO and the auditors have been backed by the activist shareholders due to the poor performances of the bank. According to Shakti Sinha, the director that was appointed by the RBI for the bank said that the two-third of the loan book was banking debts. These deaths were found in terms of collaterals and risk-weighted assets.
Various investors fetched RBI for quotation and were interested to take over however, none of them sorted out to be a perfect match for what RBI was looking. Singapore DBS then emerged for the rescue and offered 2,500 crores to it. The Clix Capital was stuck over the issues of valuation for quite a long time until it fixed its investment on to the LVB.
The Lakshmi Vilas Bank was established by some enthusiastic men, and that is how this 94-year old financial institution marked its rise. Lakshmi Vilas Bank saw deposits of Rs, 1500 crore, of which 1000 crore was recovered. The downfall was the result of excessive lendings to the market. The idea behind these lendings was to capture the market, but the wrong planning leads to the exact opposite of it.
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