Lakshmi Vilas Bank branches will open and operate as DBS Bank India from Friday (November 27), the Reserve Bank of India said in a press release. Consequently, the freeze on withdrawals from Lakshmi Vilas Bank account deposits will also cease to exist, RBI said.
"Customers, including depositors of the Lakshmi Vilas Bank Ltd. will be able to operate their accounts as customers of DBS Bank India Ltd. with effect from November 27, 2020," RBI said.
"DBS Bank India is making necessary arrangements to ensure that service, as usual, is provided to the customers of the Lakshmi Vilas Bank," RBI added.
The RBI's move came after the Union Cabinet headed Prime Minister Narendra Modi approved the merger of Lakshmi Vilas Bank (LVB) with DBS India, which is the wholly-owned subsidiary of DBS Bank Singapore.
"The speedy amalgamation and resolution of the stress in LVB is in line with government's commitment to a clean banking system, while protecting the interests of depositors, public and financial system," Union Minister Prakash Javadekar said in a media briefing at the end of the cabinet meeting. With the merger, there will no further restrictions on the depositors regarding the withdrawal of their deposit, the minister added.
As part of the amalgamation plan, DBS India will infuse fresh capital of Rs 2,500 crore into LVB and the entire share capital and reserves and surplus will be written off.
The Reserve Bank of India had, on November 17, proposed the merger of the 94-year-old beleaguered lender with DBS India. On the same day, it had placed LVB under a moratorium for one month and capped withdrawals from its customers' accounts at Rs 25,000 a month.
The Reserve Bank had also superseded the board of the LVB and appointed T N Manoharan, former non-executive chairman of Canara Bank, as administrator of the bank for 30 days.