Lakshmi Vilas Bank's Rs 318.2 cr worth of Tier-II bonds to be written down

The move is part of steps to absorb non-performing assets before LVB's amalgamation with DBS Bank

Lakshmi Vilas Bank’s Tier-II bonds worth Rs 318.2 crore will be written down before its amalgamation with DBS Bank India comes into effect from Friday (November 27). The step is part of the move to absorb non-performing assets.

The Reserve Bank of India, in its communication to the bank, pointed to rules for writing down Basel-III-compliant Tier-II bonds.

Anil Gupta, vice-president and sector head, financial sector ratings, ICRA, said RBI had set a precedence with the proposed write-off as it was the first time a Tier-II bond was being written off. Investors should factor in the risk in Basel-III instruments,