The Reserve Bank of India has put Tamil Nadu based Lakshmi Vilas Bank on moratorium for a month and restricted the withdrawals to Rs 25,000 during the period, the finance ministry said in a statement.The private lender has been put under moratorium effective from November 17, 6 pm till December 16, during which the depositors will be allowed to withdraw more than Rs 25,000 for to pay for education, medical expenses and marriage costs subject to the approval of the finance ministry.
Lakshmi Vilas Bank ran into trouble in 2019 after RBI rejected its proposal with shadow lender Indiabulls Housing Finance.After the bank’s asset quality deteriorated, it has been looking for capital infusion and has been struggling to find a buyer.Reports said the bank was in talks with Clix Capital for capital infusion and a possible merger.
In September last, the central bank had set up a three-member committee headed by Meeta Makhan to manage the cash-strapped bank after its shareholders voted against the seven directors.Soon after the private sector lender was put under moratorium, the RBI unveiled a scheme to merged Laksmi Vilas Bank with with DBS Bank India Ltd. which is a wholly owned subsidiary of DBS Bank Ltd of Singapore.
