Lakshmi Vilas Bank hits 52-week low after RBI initiates PCA

Lakshmi Vilas Bank (LVB) was locked in 5% lower circuit at Rs 34.75 after the Reserve Bank of India placed the bank under prompt corrective action (PCA) framework with effect from 27 September 2019.

LVB said that the PCA is aimed at improving the performance of the bank and will not have any adverse impact on the normal day-today operations of the Bank including acceptance/repayment of deposits in the normal course. Bank can also undertake lending activities to all segments except corporates and other stressed and high risk sectors. The announcement was made on Saturday, 28 September 2019.

On Friday, 27 September 2019, shares of LVB fell 4.94% after the Economic Offences Wing (EOW) of the Delhi Police registered a case against the bank alleging misappropriation of Religare Finvest's fixed deposits held in the bank.

LVB clarified post trading hours on Friday, 27 September 2019, that mere registration of FIR against the bank does not mean anything at this stage. The bank is committed to cooperate with the investigating agencies and regulatory authorities apparently in order to bring out the malicious attempts of RFL to mislead the public to coverup massive fraud indulged by their own promoters/employees/group companies.

During the financial year 2017-18, the bank had adjusted deposit loans aggregating to Rs 794 crore, extended to RHC Holding and Ranchem, group companies of Religare Finvest (RFL) against RFL's deposits. Disputing the said adjustment, RFL had filed a suit against the bank in May, 2018 before the High Court of Delhi and the same is being defended appropriately by the bank.

RFL had also filed an interim application in the suit claiming attachment of the assets of the bank, its employees, directors etc. The said application was heard for more than an year and when the same was reserved for orders, RFL made a submission to the court for withdrawing the said interim application for the reasons best known to them. Till date no adverse orders have been passed against the bank by any judicial forum.

RFL filed a complaint with EOW, Delhi and EOW has registered an FIR against the Bank, directors and other unknown persons alleging the very same issues.

RHC Holding is owned by Malvinder Mohan Singh and Shivinder Mohan Singh, former chairman & managing director of Ranbaxy Laboratories and current promoters of Fortis Healthcare, Religare Enterprises and other diversified businesses

On 29 August 2019, the bank informed that its MD and CEO, Parthasarathi Mukherjee, resigned due to personal reasons.

Meanwhile, the S&P BSE Sensex was down 307.59 points or 0.79% to 38,514.98.

On the BSE, 3028 shares were traded in the counter so far compared with average daily volumes of 2.81 lakh shares in the past two weeks. The stock hit an intraday high and low of Rs 34.75, which is also a 52-week low for the scrip. The stock hit a 52-week high of Rs 97.35 on 09 Apr 2019.

LVB reported a net loss of Rs 237.25 crore in Q1 June 2019 over a net loss of Rs 123.87 crore in Q1 June 2019 over Q1 June 2018. Total income fell 14% to Rs 677.17 crore in Q1 June 2019 over Q1 June 2018.

LVB is a scheduled commercial bank. As on 30 June 2019, Lakshmi Vilas Bank had 569 branches, 5 extension counters, 1047 ATMs in 18 states and 1 union territory. The bank offers various bouquets of products and services.

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