You are here: Home » Finance » News » Banks
Business Standard

Lakshmi Vilas Bank shortlists 3 names for MD, CEO post; to send list to RBI

The lender's chief executive S Sundar and six other directors were voted out by shareholders earlier this week

Topics
Lakshmi Vilas Bank | RBI | Clix Capital

Press Trust of India  |  New Delhi 

Lakshmi Vilas Bank
Subsequently, LVB had in June 2020 inked a non-binding agreement with the Clix Group for amalgamation.

The Committee of Directors (CoD) at the troubled (LVB) has shortlisted three candidates for the post of MD and CEO and the names will be sent to the within a week, an official of the bank said.

The lender's chief executive S Sundar and six other directors were voted out by shareholders earlier this week.

Post the removal, the Reserve Bank appointed a three-member Committee of Directors (CoD) comprising independent directors Meeta Makhan, Shakti Sinha and Satish Kumar Kalra.

"A bank cannot work without a managing director and chief executive officer (MD and CEO). So, we at the board got together and discussed how to move ahead without an MD (for the time being).

"The bank had interview for the post... and we have selected three candidates. We will send our recommendations to the Reserve Bank within a week," Sinha told PTI.

All the three candidates are from the private sector, he added.

He also emphasised that the CoD is running the bank in the capacity of an administrator and there is complete transparency in its functioning.

In reply to a question on what could have triggered the shareholders to take such a drastic step, Sinha said apparently they lost confidence in those directors and thus voted them out.

The South-based lender has been struggling to raise capital for the last few years. A proposal of merger with non-banking company Indiabulls Housing was rejected by the in 2019.

Subsequently, LVB had in June 2020 inked a non-binding agreement with the Clix Group for amalgamation.

Sinha said the CoD is much very inclined to go ahead the deal with Aion Capital-backed Clix Capital, which is an NBFC.

"We want the bank to function normally and we are going ahead with the raising of capital, as planned. They (Clix) are committed to the process of going ahead. The bank remains the same, we hope to get it very soon," he added.

For the full year 2019-20, LVB posted a net loss of Rs 836.04 crore, marginally lower from the loss of Rs 894.09 crore in 2018-19

Sinha also said the situation at LVB is akin to what went through earlier this year.

"Our troubles are old troubles, these are not fresh troubles. We have big burden of the past. They thought the economy is doing well (in the past) and took a bit of risk. There were three-four bad deals of Rs 300-500 crore and that suddenly changed everything," Sinha said.

Troubles at the bank started after it shifted its focus to large businesses from It extended nearly Rs 720 crore to the investment arms of Malvinder Singh and Shivinder Singh, former promoters of pharma major Ranbaxy and Fortis Healthcare, against fixed deposits (FDs) of Rs 794 crore made with the bank in late 2016 and early 2017.

Last week, the Delhi Police arrested two former employees of for their alleged involvement in misappropriation of fixed deposit receipts worth Rs 729 crore of Limited.

As the bank was incurring losses for the previous 10 quarters, the Reserve Bank of India placed it under the (PCA) framework in September 2019.

Under the PCA, the bank has been asked to bring in additional capital, restrict further lending to corporates, reduce NPA and improve its provision coverage ratio to 70 per cent.

"There has been a steady decline in the bank's deposit base since September 2019 and increase in the NPA ratios. The bank's Tier 1 capital ratio has turned negative, at (-)0.88 per cent, as compared to the minimum requirement of 8.875 per cent," LVB's auditor has said in its annual report for FY20.

However, the truncated board of LVB has sought to assuage investors, stating that the bank's liquidity situation was comfortable and assured the depositors that their monies were safe.

"With Liquidity Coverage Ratio (LCR) of about 262 per cent as on September 27, against minimum 100 per cent required by RBI, the deposit-holders, bond-holders, account-holders and creditors are well safe guarded," the bank had said in a statement on Sunday.

Stock of LVB closed 6.7 per cent lower at Rs 18.80 apiece on BSE on Wednesday.

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: Wed, September 30 2020. 23:37 IST
RECOMMENDED FOR YOU
.