Meanwhile, on Friday, November 20, credit rating agency, CARE Ratings (CARE) downgraded the rating of LVB’s Unsecured Redeemable Non-Convertible Subordinated Lower Tier II Bonds (already Issued by the Bank) and Additional Tier I Bonds (yet to be issued by the Bank) and put them on credit watch with developing implications.
“The ratings assigned to the various debt instruments of The LVB have been placed on credit watch with developing implications with the moratorium imposed by Government of India (Gol) on LVB, after considering an application made by the Reserve Bank of India (RBI). RBl's action comes on the backdrop of significant deterioration in the financial risk profile of the bank with weakened capitalisation levels and in the absence of a credible revival plan,” CARE said in detailed rationale.
The RBI has superseded the Board of Directors of the bank and appointed TN Manoharan (former non-executive chairman of Canara bank) as the Administrator and on November 17, 2020, RBI published a draft scheme for amalgamation of LVB with DBS Bank India Limited (DBS).
The extinguishment of capital/reserves and merger with an unlisted bank will be negative for minority investors in LVB, the larger interest of depositors has been protected.
Till 10:19 am, a combined around 735,000 shares had changed hands and there were pending sell orders for 18 million shares on the NSE and BSE, the exchange data shows. In comparison, the S&P BSE Sensex was trading flat at 43,895 points.