An action initiated for merging Lakshmi Vilas Bank with DBS!
Posted on: 18/Nov/2020 11:50:24 AM
The Reserve Bank of India as indulged in the administration of the Lakshmi Vilas Bank, which is presently under great emergency due to the unrecovered loans extended by the bank. The Reserve Bank of India has initiated activities for merging this Lakshmi Vilas Bank with DBS Bank.
Lakshmi Vilas Bank operated with Karur as its headquarters. This bank has customers not only throughout India but also in countries such as Singapore. However, the Bank has been performing very poorly showing multiplying losses due to the non-recovery of loans. During the 1st 2 quarters of the current financial year (2020-21 alone, Lakshmi Vilas Bank met with a loss of over Rs. 500 Crores.
Increasing non-recovered loans:
The Reserve Bank of India has explained that the 2 main reasons for the poor performance of Lakshmi Vilas Bank have been the customers withdrawing huge amounts and low quantum of money in circulation.
With the main objective of retrieving Lakshmi |Vilas Bank from the irrecoverable loans crisis, the Reserve Bank of India has interfered with this bank administration and has restricted that the customers can withdraw only up to a maximum of Rs. 25000 in a single time until 16th December. At the same time, the Reserve Bank of India has advised the bank customers not to panic.
Meanwhile, several organisations have come forward to acquire Lakshmi Vilas Bank. It is gathered that DBS bank is at the forefront of this venture. DBS bank’s current sound financial status including large reserve funds and the less quantum of unrecovered loans are cited as the main reasons for DB|S bank’s initiatives to acquire Lakshmi Vilas Bank. Further, since DBS Bank also has branches in Singapore like Lakshmi Vilas Bank, it can continue offering bank services for all the foreign-based Indian customers having accounts with Lakshmi Vilas Bank.
It is understood that DBS Bank, which has converted its domestic operations into its own supplementary organisation have plans to expand its operations by acquiring Lakshmi Vilas Bank. Following Yes Bank, |Lakshmi Vilas Bank happens to be the second bank to be embroiled into a major financial crisis within the same year thus brought under the control of the Reserve Bank of India.
