Cabinet approves merger of LVB with DBS Bank

The union cabinet on Wednesday  approved the merger of Lakshmi Vilas Bank (LVB) with DBS India, Development Bank India Ltd (DBIL), which is a private bank. The move comes a week after the Centre imposed a 30-day moratorium on Lakshmi Vilas Bank, restricting cash withdrawals at Rs 25,000 per depositor. The cabinet also removed restrictions on withdrawal of deposits by depositors.

Addressing the media in New Delhi, union minister Prakash Javadekar said that the decision will provide comfort to 20 lakh depositors and protect the services of 4,000 employees. The minister said that those responsible for deteriorating financial health of the LVB would be penalised. The government had earlier on November 17 on the advice of the RBI imposed a 30-day moratorium on the crisis-ridden LVB restricting cash withdrawal at Rs 25,000 per depositor.

The Reserve Bank also superseded the board of Lakshmi Vilas Bank (LVB) and appointed T N Manoharan, former non-executive chairman of Canara Bank, as its administrator for 30 days.The RBI placed in the public domain a draft scheme of amalgamation of LVB with DBS Bank India Ltd (DBIL). DBS Bank India, in a statement, said the proposed amalgamation will provide stability and better prospects to LVB's depositors, customers and employees. Lakshmi Vilas Bank is the second private sector bank after Yes Bank which has run into rough weather during this year.