Turmoil at LVB puts Clix deal in jeopardy

The struggling private sector Lakshmi Vilas Bank is desperately looking for capital and is in talks with the Clix Group for a merger.
An ATM of Lakshmi Vilas Bank at Connaught place in New Delhi.(Sonu Mehta/HT File Photo)
An ATM of Lakshmi Vilas Bank at Connaught place in New Delhi.(Sonu Mehta/HT File Photo)
Updated on Sep 30, 2020 12:54 AM IST
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Mint, Mumbai | ByGopika Gopakumar

Clix Capital, which was in advanced talks with Lakshmi Vilas Bank (LVB) for a potential merger, may approach the Reserve Bank of India (RBI) for clarity on the future of the deal after the bank’s shareholders voted out seven board members, including its managing director, two people directly aware of the matter said.

The NBFC expects RBI to communicate a final decision on the matter within two weeks, the people said on the condition of anonymity.

“While the merger talks were progressing smoothly, the sudden change of management in Lakshmi Vilas Bank can potentially throw the deal off gear,” said one of the two people cited above. The second person, a senior official at Clix Capital, said: “We hope that the new management will be open to the merger.”

“However, if the transaction doesn’t go through in the next fortnight or month, then there is a likelihood that the Reserve Bank will merge the bank with another bank with a stronger balance sheet,” the person mentioned above added.

On September 25, shareholders of Lakshmi Vilas Bank voted against the appointment of seven directors, including S Sundar as the managing director and chief executive.

The struggling private sector bank is desperately looking for capital and is in talks with the Clix Group for a merger.

The bank’s capital adequacy ratio fell to 0.17% as on 30 June as against a regulatory minimum of 10.875%.

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