by BERNAMA / pic by BLOOMBERG
INDIA’s cash-strapped Lakshmi Vilas Bank would be merged with the Indian subsidiary of Singapore’s DBS Bank.
Lakshmi Vilas Bank’s financial position has undergone a steady decline with the bank incurring continuous losses over the last three years, the Reserve Bank of India (RBI) said on Tuesday.
The RBI has proposed the bank’s merger with DBS Bank India Ltd (DBIL).
Although DBIL is well capitalised, it will bring in additional capital of 25 billion rupees (US$335 million) upfront to support credit growth of the merged entity, the Indian central bank said.
Chennai-headquartered Lakshmi Vilas Bank lacked any viable strategic plan amid mounting bad loans, the RBI said while placing it under moratorium for 30 days.
“The bank has not been able to raise adequate capital to address issues around its negative net-worth and continuing losses. Further, the bank is also experiencing continuous withdrawal of deposits and low levels of liquidity,” the central bank said in a statement.
Lakshmi Vilas Bank operated 563 branches and 974 ATMs across India as of September-end, according to information on its website.