RBI, DBS Bank to ask SC to move cases on LVB-DBS merger to one location

The Reserve Bank of India and DBS Bank are planning to ask the Supreme Court for a transfer of all the matters related to merger of Lakshmi Vilas Bank (LVB) with DBS Bank India to one location. Currently petitions challenging the merger were filed in four different high courts in the country.

Senior Advocate Mukul Rohatgi for DBS Bank informed the Madras High Court that RBI and DBS Bank have approached the Apex Court to transfer of all matters related to the LVB-DBS merger currently being heard by the High Courts of Madras, Bombay, Karnataka and Delhi to one location. He made this submission during the Madras High Court's hearing of a petition filed by bond holders of LVB challenging the banking regulator’s decision to extinguish tier-2 bonds worth Rs 320 crore, 

After hearing the submission, a division bench of the Madras High Court, consisting of Justice Vineet Kothari and Justice M S Ramesh, said that it would wait for the Apex Court's decision, following which it will decide on taking the petitions forward.

It may be noted, the same bench had, last month, asked DBS Bank India Limited (DBIL) to create a seperate reserve fund, if the Court decides Lakshmi Vilas Bank (LVB) shareholders should be compensated. The matter is expected to come up for further hearing.

Today's hearing was related to a Bond holder's petition that challenged RBI’s decision to extinguish tier-2 bonds worth Rs 320 crore. The bond holder argued that the Centre-approved merger scheme was silent on the write-down of tier-2 bonds, and that the central bank's decision was arbitrary. The petitioners have also argued that since the liabilities extinguished were maturing in 2024-25, there was no urgency on the part of the regulator to extinguish these bonds.