The government on Wednesday approved the merger of Lakshmi Vilas Bank (LVB) with the Indian subsidiary of Singapore’s DBS, said a senior minister on Wednesday, adding that the blame for the lender’s collapse has to be fixed.
The Reserve Bank of India (RBI) took over LVB on November 15 due to a “serious deterioration” in its finances and temporarily capped withdrawals from the Chennai-based lender, which has been scouting for a partner since last year amid mounting bad loan and governance issues.
The amalgamation of Lakshmi Vilas Bank with DBS India subsidiary is in the interest of Lakshmi Vilas “employees, customers and investors”, said Prakash Javadekar at a media briefing in Delhi. “The government has asked the RBI to take action against the people in the management who drive banks to the brink of collapse—liability has to be fixed.”
“Union Cabinet approves Scheme of Amalgamation of Lakshmi Vilas Bank with DBS Bank India Limited. With this, there’ll be no further restrictions on depositors regarding the withdrawal of their deposits,” he said, according to news agency ANI.
The RBI’s proposed plan would give the Singaporean bank’s expansion ambitions a fillip as it would vastly increase the footprint of DBS in India, where it only has around 30 branches, according to Reuters..
Chennai-headquartered LVB, by contrast, has a vast network of more than 550 branches and 900-plus ATMs across India.