Short Article

30-11-2020 | 11:41 AM

Lakshmi Vilas Bank                             

• The Reserve Bank of india Bank has recently placed a 30-day moratorium on Lakshmi Vilas Bank of India.
• The central bank has also drawn up a merger scheme for the bank. Under the plan, the Lakshmi Vilas Bank is to be amalgamated with the Singapore DBS Bank.

Key Points:

• The Chennai-based bank had undergone a steady decline in the last three years. It has been experiencing continuous withdrawal of deposits and very low levels of liquidity. The bank failed to raise adequate capital to address its issues.
• Around one-fourth of the bank advances have turned into bad assets. Also, the non-performing assets of the bank were at 25.4% of its advances in the September quarter. The RBI has put a cap of Rs 25,000 on withdrawals from the bank.

Note:
Moratorium is temporary suspension of financial activities until issues are resolved.