Lakshmi Vilas Bank crisis
What is the Lakshmi Vilas Bank (LVB) crisis?
What is the Lakshmi Vilas Bank (LVB) crisis? In the past two years, India has seen some major disruptions in the banking sector. After the PMC Bank debacle and YES Bank crisis, Lakshmi Vilas Bank's future also seems to be in jeopardy. Founded in 1926 by a group of businessmen under the leadership of VSN Ramalinga Chettiar to aid small businesses, LVB later turned its focus from SMEs to large businesses. And that led to its downfall.
What is happening at Lakshmi Vilas Bank currently?
The Reserve Bank of India on October 17, 2020, seized control of a struggling Lakshmi Vilas Bank and forced its merger with the local unit of Singapore’s largest lender DBS Bank. In November, RBI capped deposit withdrawals from the bank at Rs 25,000 a day for a month (till December 17, 2020). The regulator's intervention came after watching the bank struggling to find a suitor to help it meet minimum capital buffers. According to the rescue plan, the entire paid-up share capital, and reserves and surpluses of LVB would be written off.
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