Lakshmi Vilas Bank board approves plan to raise Rs 500 cr via rights issue

Lakshmi Vilas Bank’s (LVB’s) board approved the plan to raise up to Rs 500 crore through a rights issue at its meeting on Thursday. 

Sources said the timing of the issue will be decided based on regulatory approvals. On whether the board discussed the Clix Capital deal and appointment of a chief executive officer, the source said, “No other issues were discussed, including Clix Capital”. 

Many existing institutional investors are expected to participate and subscribe to the issue to protect their existing investments, sources said.

LVB was embroiled in a controversy recently after around 60 per cent of its shareholders voted against the appointment of the managing director and CEO and six directors, including promoter K R Pradeep. After this, the Reserve Bank of India appointed a committee to manage the bank’s affairs.

Sources said the aim behind the proposed rights issue is to increase LVB’s capital adequacy ratio (CAR).

As of June, LVB’s Basel-III compliant CAR slumped to 0.17 per cent from 1.12 per cent in the previous quarter. The bank’s tier-I capital ratio turned negative and worsened sequentially to (-)1.83 per cent in the June quarter from (-)0.88 per cent, compared with the minimum requirement of 8.875 per cent. During the bank’s AGM, shareholders approved a resolution authorising it to undertake capital raise through a follow-on public offer, rights issue, qualified institutional placement (QIP) or other available routes.