Centre places Lakshmi Vilas Bank under moratorium, withdrawals capped

Chennai: Central government brought Lakshmi Vilas Bank under moratorium for 30 days, restricting withdrawals to Rs 25,000.

The Centre issued the moratorium notification under Section 45 (2) of the Banking Regulation Act, 1949. The moratorium came into effect from 6 p.m. on Tuesday and will be in place up to 16th December 2020.

As per the notification, Lakshmi Vilas Bank shall not without the permission in writing of RBI:

MS Education Academy

* Make payment to a depositor an aggregate sum exceeding Rs 25,000 lying to his credit in any kind of deposit including multiple deposit.

* Wherever such depositor is having dues payable to the bank in any manner, either as a borrower or surety, the amount payable to such depositor shall be made after adjusting the relevant borrowal accounts.

* Payment to bank creditor cannot exceed Rs 25,000, subject to following exceptions: (i) making of payment of amounts towards any drafts or pay orders issued by the Lakshmi Vilas Bank and remaining unpaid on the date on which the order of moratorium comes into force; (ii) paying the proceeds of the bills received for collection on or before the 17th day of November, 2020; (iii) making payment towards existing liabilities for call money or inter-bank borrowing (iv) trades effected prior to the date of moratorium for which settlement is yet to take place.

* Grant any loans or advances or make investments in any credit instruments.

According to the notification, the RBI may by a general or special order permit Lakshmi Vilas Bank to allow pay to its depositors an amount in excess of Rs 25,000 to meet unforeseen expenses towards (a) medical treatment of the depositor or any person actually dependent on him (b) towards the cost of higher education of the depositor or any person actually dependent on him for education in India or outside India; (c) to pay obligatory expenses in connection with marriage or other ceremonies of the depositor or his children or of any other person actually dependent upon him (d) in connection with any other unavoidable emergency if there is sufficient credit in his account.

However, the sum such paid shall not exceed Rs 5 lakh or the actual balance lying to the credit of the account of such depositor, whichever is less.

RBI announces draft scheme

Meanwhile, the Reserve Bank of India (RBI) unveiled a draft scheme to amalgamate private sector lender Lakshmi Vilas Bank (LVB) with DBS Bank India Ltd (DBIL).

According to RBI, the proposed amalgamation will provide stability and better prospects to Lakshmi Vilas Bank’s depositors, customers and employees following a time of uncertainty.

“At the same time, the proposed amalgamation will allow DBIL to scale its customer base and network, particularly in South India, which has longstanding and close business ties with Singapore,” it said.

DBS Bank , Lakshmi Vilas Bank

DBS has been in India since 1994. In March 2019, to expand the franchise and build greater scale, DBS converted its India operations to a wholly owned subsidiary, DBIL.

DBIL is now present in 24 cities across 13 states.

Lakshmi Vilas Bank has a 94-year history in India, with an established retail and SME customer base, and a strong presence in South India.

Subscribe us on The Siasat Daily - Google News
Back to top button