Mumbai (Maharashtra) [India], November 17 (ANI): The Reserve Bank of India (RBI) on Tuesday unveiled a draft scheme to amalgamate private sector lender Lakshmi Vilas Bank (LVB) with DBS Bank India Ltd (DBIL).
The decision followed soon after the RBI imposed a one-month moratorium on the private lender and capped deposit withdrawals at Rs25,000.
The proposed scheme of amalgamation is under the special powers of the Government of India and RBI under Section 45 of the Banking Regulation Act, 1949.
According to RBI, the proposed amalgamation will provide stability and better prospects to Lakshmi Vilas Bank's depositors, customers and employees following a time of uncertainty. "At the same time, the proposed amalgamation will allow DBIL to scale its customer base and network, particularly in South India, which has longstanding and close business ties with Singapore," it said.
To support the amalgamation, DBS will inject Rs 2,500 crore (SGD 463 million) into DBIL if the scheme is approved. This will be fully funded from DBS' existing resources.
DBS will await final decision on the proposed scheme from RBI and the Government of India, and will announce further details at a later stage.
DBS has been in India since 1994. In March 2019, to expand the franchise and build greater scale, DBS converted its India operations to a wholly owned subsidiary, DBIL. DBIL is now present in 24 cities across 13 states.
Lakshmi Vilas Bank has a 94-year history in India, with an established retail and SME customer base, and a strong presence in South India.
The Lakshmi Vilas Bank has been placed under an order of moratorium on November 17, 2020 which will be effective upto December 16, 2020, under section 45 of the Banking Regulation Act, 1949. (ANI)