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Lakshmi Vilas Bank Hits Lower Circuit After Government Caps Withdrawal Limit

Lakshmi Vilas Bank: Depositors will be allowed to withdraw more than Rs 25,000 with RBI's permission.
Lakshmi Vilas Bank: Depositors will be allowed to withdraw more than Rs 25,000 with RBI's permission.

Lakshmi Vilas Bank shares froze at the lower limit of 20 per cent at Rs 12.40 on the BSE at opening bell after the government, on Tuesday, placed the Tamil Nadu-based private sector lender under a moratorium and capped withdrawals on the recommendations of RBI in view of the bank's deteriorating financial health.

The central government on Tuesday placed the Tamil Nadu-based private sector lender Lakshmi Vilas Bank under a moratorium, capping withdrawals from its customers' accounts at Rs 25,000 a month, the Ministry of Finance said in a statement. However, depositors will be allowed to withdraw more than Rs 25,000 with permission from the Reserve Bank of India for medical treatment, payment of higher education and marriage expenses, the ministry added.

Lakshmi Vilas Bank, which needed capital urgently due to its worsening asset quality, has been scrambling to find a buyer for the past one year. It was reportedly in talks with Clix Capital for capital infusion and a possible merger.

The BSE Sensex was trading flat at 43,982.70, up 25.40 points or 0.06 per cent and the NSE Nifty was at 12,876.30, up two points.