Following the approval, DBS Group Holdings – Singapore’s largest bank – takes over Lakshmi Vilas Bank in an agreement pushed by RBI. This also marks the first time India has approached a foreign entity to rescue a struggling domestic bank.
Lakshmi Vilas is the second bank in need of a rescue this year and the third collapse of a major depository institution in 15 months and the first since the coronavirus pandemic occurred.
Under the agreement, DBS acquired 563 branches, 974 ATMs and a franchise of DKK 1.6 billion. Dollars in retail liabilities.
The 94-year-old LVB now ceases to exist and its equity is completely wiped out. Its deposit will now be on the books of DBS India.
Previously, the RBI had placed the LVB under a one-month moratorium until December 16, when payouts to depositors have been limited to Rs 25,000.
Under the new rule, the payout limit for all types of accounts held by a depositor may not exceed Rs 25,000. The withdrawal limit is per. Deposits and not per. Account.
Here’s what to do if you have a savings account with LVB:
Immediately stop auto-credit of salary or any other income such as dividends on shares, etc., as the case may be, and make an arrangement for directing the same to another account.
You must inform the payer of this income in writing that you want payments credited to another bank savings account, ie. change the previous bank mandate given to the payer.
Also, if auto payment payments such as Mutual fund SIPs, EMI loans, insurance premium payments, etc. Had run from your LVB account, these payments would be debited from your LVB account, provided the total amount of debits does not exceed Rs 25,000 in the moratorium.
If the total amount exceeds Rs 25,000, you may be in trouble. Ask the recipient for alternative arrangements.
If you had a loan account with LVB, it will be automatically deducted from the Rs 25,000 available to you. The rest, if any, will be available for withdrawal.
An RBI statement states that “if LVB has received the full payments against any amounts due from the borrowers, the bank may release the securities pledged, mortgaged or pledged during the moratorium.”