RBI Action Has No Connection With Religare Finvest FIR: Lakshmi Vilas Bank

Lakshmi Vilas Bank shares fell 5 per cent on Tuesday, locking in the lower circuit for the third day in a row. Chennai-based private sector lender Lakshmi Vilas Bank informed exchanges on Saturday that the Reserve Bank of India had on Friday placed it under its Prompt Corrective Action (PCA) framework. Lakshmi Vilas Bank however said that restrictions by the RBI has no connection whatsoever with the FIR registered in the Economic Offences Wing (EOW) by Religare Finvest, news agency ANI tweeted citing a newspaper notice posted by the bank. 

The probe by Delhi Police's Economic Offenses Wing (EOW) an FIR by financial services company Religare Finvest (RFL) which has accused Lakshmi Vilas Bank of misappropriating Rs. 790 crore it kept with the bank as a fixed deposit.

The directors face charges of cheating, breach of trust, misappropriation and conspiracy, Lakshmi Vilas said in a statement on Thursday, adding that it was considering taking "appropriate legal measures".

Meanwhile, the bank has reassured its customers that it can transact normal business and there are no restrictions on operations by depositors.

According to an exchange filing posted by Lakshmi Vilas Bank on Saturday, "The corrective action plan also covers various suggestions/measures to a) recovers NPAs, b) reduce costs, c) boost capital, d) downsizing risk-weighted assets, e) improve profitability etc. the management is in the process of implementing all these measures."

At the intraday low on Tuesday, the stock has dropped 14 per cent to Rs 33.05 in three consecutive sessions.

At 11:08 am, Lakshmi Vilas Bank shares were locked in the 5 per cent lower circuit underperforming the Sensex which was up 0.47 per cent.