Government of India (GoI,) on the 25th of November, approved amalgamation of Lakshmi Vilas Bank with DBS Bank.
The merger came as a rescue to crisis-ridden Lakshmi Vilas Bank (LVB) with DBS Bank India Ltd (DBIL.
The Union Minister Prakash Javadekar told reporters that the decision would provide comfort to 20 lakh depositors and protect the services of 4,000 employees.
The Central Government also removed restrictions on withdrawal of deposits by depositors.
The official spokesperson of the GoI said, “Cabinet approves Scheme of Amalgamation of Lakshmi Vilas Bank with DBS Bank India Limited; with this there will no further restrictions on the depositors regarding withdrawal of their deposits.”
The Government on the 17th of November on the advice of the Reserve Bank of India (RBI) imposed a 30 day moratorium on the crisis ridden LVB restricting cash withdrawal at Rs. 25,000 per depositor.
The RBI simultaneously placed in public domain a draft scheme of amalgamation of LVB with DBIL, a banking company incorporated in India under Companies Act, 2013, and having its Registered Office at New Delhi.
The Reserve Bank had also superseded the board of the LVB and appointed T N Manoharan, former non-executive chairman of Canara Bank, as administrator of the bank for 30 days.
LVB is the second private sector bank after Yes Bank which has run into rough weather during this year.
In March, capital-starved Yes Bank was placed under a moratorium. The government rescued Yes Bank by asking state-run State Bank of India to infuse Rs. 7,250 crore and take 45 % stake in the bank.
Stay tuned for further updates.