All India Bank Employees’ Association (AIBEA) has said that LVB should be amalgamated with a public sector bank, and has called for a probe on RBI's role in not taking timely action.
C H Venkatachalam, General Secretary, AIBEA said that the association had been demanding timely action by RBI on LVB's deteriorating health for the lender's merger with a Public sector Banks. Such proactive action was not taken.
"Now this announcement has come as a shock to the bank's customers and general public. This will create panic and doubt in the minds of people about the stability and dependability of nanks because people keep their hard earned savings with them," said Venkatachalam.
"RBI, whose role is to maintain the stability of the financial sector, cannot escape blame for not taking timely action. RBI’s role should be thoroughly probed," said Venkatachalam alleging that some top management officials of LVB are responsible for the huge bad loans in the Bank and action should be taken on them.
He added that the then management of the bank was responsible for bad loans of more than Rs 2,000 crore to borrowers like Religare, Jet Airways, Cox and Kings, Nirav Modi group, Coffee Day and Reliance Housing Finance.
All these undesirable loans were known to RBI as it had its nominee as Director on LVB's Board. The lender was brought under PCA norms indicating that it needed correction. "But unfortunately a very long rope has been given to the bank and today, the RBI has announced a moratorium," he said.