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<ul><li>India’s <keyword id="6355512" type="ORGANIZATION" weightage="20" keywordseo="union-cabinet">Union Cabinet</keyword> has approved the merger of the troubled <keyword id="135860" type="COMPANY" weightage="20" keywordseo="Lakshmi-Vilas-Bank">Lakshmi Vilas Bank</keyword> (LVB) with <keyword id="133737" type="CITY" weightage="20" keywordseo="DBS-Bank">DBS Bank</keyword> India.</li><li>“This is a part of the clean up that was required in the banking sector,” said Union Minister <keyword id="119642" type="PERSON" weightage="20" keywordseo="Prakash-Javadekar">Prakash Javadekar</keyword> during the press conference.</li><li>He also revealed that the members of the board, who have now been removed, will be held accountable and there will be liability for those found to have made mistakes. </li></ul>The merger of the troubled Lakshmi Vilas Bank (LVB) with DBS Bank India has been approved by the <keyword id="44734" type="ORGANIZATION" weightage="20" keywordseo="Indian-Government">Indian government</keyword>’s Union Cabinet. Union Minister Prakash Javadekar said the ₹20,000 crore deposit of the 20 lakh customers is now safe. “Customers need not rush to banks to withdraw their money. However, whoever does wish to withdraw can now do so at any time in a safe way,” he said during the press conference. He also revealed that those members of the board who were responsible for the mistakes will be held accountable. “Those who have made mistakes, will be punished. There will be improvement in overall oversight also so as not to repeat such incidents in the future,” Javadekar explained. Resolving the LVB crisis On the fateful night of November 17, <a href="https://www.businessinsider.in/finance/news/lakshmi-vilas-bank-under-moratorium-rbi-caps-maximum-deposit-or-withdrawal-at-25000/articleshow/79267116.cms">LVB was put under a one-month moratorium</a> with withdrawals capped at ₹25,000 per account holder by the Reserve Bank of India (RBI). India’s apex bank also announced that due to lack of a potential bank for capital infusion, LVB will now be merged with DBS Bank India, a subsidiary of Singapore’s DBS. “This is a part of the clean up that was required in the banking sector,” said Javadekar. While some have praised the RBI’s decisiveness, others like the head of the All India Bank Employees’ Association (<a href="https://www.businessinsider.in/finance/banks/news/rbis-decision-to-merge-lvb-with-dbs-bank-questioned-by-banking-union-head-on-why-other-institutions-werent-considered/articleshow/79277116.cms">AIBEA</a>) and <a href="https://www.businessinsider.in/finance/banks/news/lakshmi-vilas-bank-promoter-believes-the-rbi-shouldve-called-for-bids-from-interested-parties-other-than-dbs-bank/articleshow/79320765.cms">one of the bank’s promoters</a> have raised the red flag on the central bank’s decision. The primary concern to these queries is why other bids were not considered for the merger of LVB. The former Chairman of Canara Bank and the man appointed by the RBI to lead the bank during the moratorium period, TN Manoharan, assured the press that <a href="https://www.businessinsider.in/finance/banks/news/lakshmi-vilas-bank-customers-have-withdrawn-10000-crore-since-rbis-moratorium-was-announced-last-night/articleshow/79281857.cms">there is no run on the bank</a> a day after taking over. Manoharan predicted that the lifting of withdrawal limits and the lifting of moratorium to be coterminal. If this holds true, <a href="https://www.businessinsider.in/finance/banks/news/lakshmi-vilas-bank-is-the-fifth-financial-firm-after-ilfs-dhfl-yes-bank-and-pmc-bank-to-collapse-in-india/slidelist/79286096.cms">RBI’s handling of the LVB crisis</a> will be considered at par with its swift handling during the Yes Bank scam. On the other hand, the PMC bank crisis remains unresolved — leaving its depositors in the lurch, even today. The street view Meanwhile, in the stock market, LVB’s share price continued to plummet for the seventh consecutive day on November 25. The stock has lost more than half of its value — around 55% — since the moratorium was announced on November 17. “In our view, the merger of LVB with DBS Bank, which is trying to expand its base in India, will be a long-term positive for the latter,” said Emkay Research in its report dated November 18. However, the analysts also point out that there is a flip side. Since LVB will now be delisted from the stock market, it will be a negative move for the minority investors in the company. SEE ALSO: <a href="https://www.businessinsider.in/finance/banks/news/bank-employees-to-go-on-a-nationwide-strike-tomorrow-in-solidarity-with-farmers-protests/articleshow/79402946.cms">Bank employees to go on a nationwide strike on November 26 in solidarity with farmers’ protests</a> <a href="https://www.businessinsider.in/tech/apps/news/twitters-verification-badges-are-set-to-make-a-return-here-all-the-terms-and-conditions-of-how-to-apply/articleshow/79402586.cms">Twitter's coveted blue ticks are making a comeback next year along with new account types and labels</a> <a href="https://www.businessinsider.in/science/space/news/elon-musk-led-space-x-is-ready-to-conduct-the-first-major-test-of-its-starship-rocket-next-week-and-set-a-new-record/articleshow/79401235.cms">Elon Musk-led Space X is ready to conduct the first major test of its Starship rocket next week and set a new record</a> <a href="https://www.businessinsider.in/tech/apps/news/15-of-the-43-apps-india-banned-today-are-dating-apps/articleshow/79389714.cms">One-third of the latest Chinese mobile apps banned by India are dating services</a>

LVB-DBS Bank India merger approved by Union Cabinet — ‘those who have made mistakes will be punished’

Chennai, Terming the handing over of the 94-year-old Karur-based Lakshmi Vilas Bank (LVB) to DBS Bank India Ltd without inviting any open bids as "<keyword id="46353" type="PERSON" weightage="20" keywordseo="Match-fixing">match fixing</keyword>", a major union in the banking sector, however, welcomed the government's decision to fix liability on <keyword id="10331723" type="UNKNOWN" weightage="20" keywordseo="LVB-board-members">LVB board members</keyword> for wrong doings. The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday gave its approval to the Scheme of Amalgamation of LVB with DBS Bank India. Reacting to the Cabinet's decision, All India Bank Employees' Association (AIBEA) General Secretary C.H.Venkatachalam told IANS: "It is like match fixing in favour of DBS Bank India. The government's decision was not in the interests of the country and proves the favours shown to foreign capital." However, Venkatachalam welcomed the announcement made by <keyword id="3198120" type="PERSON" weightage="20" keywordseo="Union-minister-Prakash-Javadekar">Union Minister Prakash Javadekar</keyword> on fixing of liability on board members of LVB for wrong doings. "This is one of the efforts of cleaning up the banking sector," Javadekar told media while briefing about the Cabinet decisions, adding that the interests of LVB's 20 lakh depositors, ₹ 20,000 crore deposits and 4,000 employees has been secured. Venkatachalam said: "We welcome that decision. But the role of the Reserve <keyword id="6355303" type="DOMAIN" weightage="20" keywordseo="bank-of-india">Bank of India</keyword>'s (<keyword id="30067" type="COMPANY" weightage="20" keywordseo="RBI">RBI</keyword>) directors on the board of LVB should also be probed." P. Ramanujam, a retired Deputy General Manager of Dena Bank, told IANS: "After every board meeting of a bank, the RBI's nominee directors have to submit a report to the central bank on the happenings in the board meeting. The RBI nominees on LVB board must have filed their reports. It has to be seen what they had filed." On November 17, the government, acting on the RBI's application, has placed the LVB under moratorium for a period of 30 days to protect the interest of LVB depositors. In parallel, the RBI, in consultation with the government, superseded the Board of Directors of the LVB and appointed an Administrator to protect the depositors' interest. The RBI's decision was opposed by many as it did not seek other suitors for LVB through an open bid though a couple of private banks showed interest. As per the draft amalgamation scheme, the RBI has said that on and from the appointed date, the entire amount of the paid-up share capital and reserves and surplus, including the balances in share/securities premium account of the transferor bank (LVB), shall stand written off. On and from the appointed date, the transferor bank shall cease to exist by operation of the scheme, and its shares or debentures listed in any stock exchange shall stand delisted without any further action from the transferor bank, transferee bank (DBS Bank India) or order from any authority. As result, the shareholders of LVB will not get anything as sale consideration.

Banking union head demands that RBI nominees on LVB board should also be held liable

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LVB-DBS Bank India merger approved by Union Cabinet — ‘those who have made mistakes will be punished’

Prabhjote Gill

Banking union head demands that RBI nominees on LVB board should also be held liable

IANS

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