Centre imposes one-month moratorium on TN-based Lakshmi Vilas Bank
The central government on Tuesday imposed a one-month moratorium on Tamil-Nadu based Lakshmi Vilas Bank Ltd., effective from 6pm on November 17. Withdrawal has been capped at Rs25,000.
However, depositors will be allowed to withdraw more than Rs25,000 to “meet unforeseen expenses” under conditions such as medical treatment, “obligatory expenses” for weddings and ceremonies, unavoidable emergencies and payment of higher education fees in and outside India, said a statement from the ministry of finance.
The moratorium was imposed following an application by the Reserve Bank of India (RBI). “Owing to serious deterioration in the bank’s financial position”, RBI in consultation with the centre, “superseded the Board of Directors” under provisions of the Banking Regulation Act, 1949, RBI said in a statement. In the absence of a credible revival plan, this has been done to protect the depositors’ interest, the RBI stated.
Following this, the RBI released a draft scheme of amalgamation of Lakshmi Vilas Bank with DBS Bank India Ltd, a wholly owned subsidiary of DBS Singapore. RBI has invited suggestions and objections from members, depositors and other creditors of both banks.