Lakshmi Vilas Bank to operate branches as DBS Bank India from Friday

 

Govt asks RBI to act against those guilty for troubled lender's woes.

The government on Wednesday asked the Reserve Bank of India (RBI) to take action against those responsible for debacle at troubled private lender Lakshmi Vilas Bank (LVB) and improve oversight of entities under its regulation.
Giving finality to the efforts towards salvaging LVB, the Union Cabinet on Wednesday gave its nod to merge LVB with DBS Bank India (DBIL). The amalgamation will come into force on. November 27. All the branches of LVB will function as branches of DBIL and LVB customers, including depositors, will be able to operate as DBIL customers from Friday.

The moratorium on LVB will also be lifted on November 27. DBIL is making arrangements to ensure that service, as usual, is provided to LVB customers, the RBI said in a statement. The banking regulator had placed LVB under the Prompt Corrective Action (PCA) regime in September 2019 due to a sharp rise in bad loans and weakening profitability.

Briefing media after the Cabinet meeting, Union minister Prakash Javadekar said the board (of LVB) has been removed, liability would be fixed and those who made mistakes would be punished. There would be an improvement in overall oversight also so as not to repeat mistakes these in the future, he said. This is in line with the cleaning up of the banking system.

The government has told the RBI that the guilty should be punished. “The people who start banks, commit fraud, and bring them on the verge of collapse should be punished. Together with this, there should be an improvement in the RBI oversight mechanism,” the minister said.