Lakshmi Vilas Bank merges with DBS Bank India arm |
The Reserve Bank of India on Tuesday announced the merger of Lakshmi Vilas Bank with the wholly-owned subsidiary of DBS Bank in India soon after it imposed a one-month moratorium on the private lender and capped deposit withdrawals at 336 dollars. Lakshmi Vilas Bank has been gasping for capital as not only its capital adequacy ratio failed to meet regulatory norms, it turned negative in the September quarter. It`s capital adequacy ratio as per Basel III guidelines contracted to -2.85% as of 30 September, as against a regulatory minimum of 10.875%. The bank reported a net loss of 3.97 billion USD in September quarter, compared with a year-earlier loss of USD 3.57 Billion. Laxmi Vilas bank, which has been under RBI`s prompt corrective action since September 2019, said on October 8 that it received an indicative non-binding offer from Clix Group. DBS Bank India Ltd is a wholly-owned subsidiary of DBS Bank Ltd, Singapore, which in turn is a subsidiary of Asia`s leading financial services group, DBS Group Holdings Limited, and has the advantage of a strong parentage. The central bank issued a banking license to operate it as a banking company on 4th October 2018. As of 30 June, DBIL`s total regulatory capital was 71.9 billion USD and its gross non-performing assets and net NPAs were low at 2.7% and 0.5%, respectively. Although the DBIL is well-capitalized, it will bring in additional capital of 25 billion upfront, to support the credit growth of the merged entity.
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