You are here: Home » Companies » News
Business Standard

Brickwork Ratings downgrades Lakshmi Vilas Bank's tier-II bonds

LVB's deposits ran down to Rs 23,565 crore in Q3FY20 and Rs 21,443 crore in Q4FY20

Topics
Lakshmi Vilas Bank

T E Narasimhan 

Lakshmi Vilas Bank
The private sector lender has very high levels of gross non-performing assets (NPAs) and reported losses in the 10 previous quarters

Brickwork Ratings has downgraded the ratings for Lakshmi Vilas Bank’s (LVB’s) tier-II bonds from “BB+” to “B+” because of the recent ouster of seven of its directors, including the managing director, weak capitalisation and concerns over asset quality.

The private sector lender has very high levels of gross non-performing assets (NPAs) and reported losses in the 10 previous quarters, except for Q4FY20, according to the rating agency. The bank has filed details of rating action with the BSE.

LVB was placed under Prompt Corrective Action (PCA) by the Reserve Bank of India in September 2019. Its capital position, asset quality and overall profitability continue to deteriorate. Furthermore, the bank’s merger with lndiabulls group did not work out.

LVB’s deposits ran down to Rs 23,565 crore in Q3FY20 and Rs 21,443 crore in Q4FY20 (from Rs 27,864 crore in Q2FY20). However, the bank has received interest from the Clix group. The deposits base has stabilised at Rs 21,161 crore as of June 30 and gross NPA at 25 per cent.

As of June, the bank’s capital adequacy ratio (CAR) was 0.17 per cent, with negative tier-I and common equity tier-1 ratios. A substantial amount of capital infusion is essential to address the concern, the ratings agency said, and expects infusion of Rs 1,500 crore to meet regulatory requirement.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, October 08 2020. 01:16 IST
RECOMMENDED FOR YOU
.