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Allaying depositors’ concerns over the safety of their funds, the RBI-appointed Administrator of Lakshmi Vilas Bank, TN Manoharan, said the top priority was to successfully implement the amalgamation scheme in a time-bound manner. He also insisted that there is no run on the bank and that it has enough liquidity to pay the depositors.
“The priority now is to resurrect the business by implementing the scheme of amalgamation after all due process and legal measures are completed. Other issues will be addressed by DBS Bank India once the amalgamation process is completed,” said Manoharan.
The former non-executive chairman of Canara Bank was responding to BusinessLine’ s query on governance issues at LVB, its loan book, depositors’ concerns over interest rate on their FDs, and a range of other issues, during a virtual press conference.
“All anomalies in terms of products of LVB vis-a-vis DBS India and writing-off loans need to be addressed as the amalgamation culminates. It will be taken care of in the best interest of the institution as well as the customers and in accordance with the law,” Manoharan added.
Under moratorium
On Tuesday, the RBI superseded the board of the capital-starved lender, placed the bank under moratorium for 30 days, and announced a draft amalgamation scheme with DBS Bank India. It restricted cash withdrawals by depositors to ₹25,000 during the moratorium period.
“The moratorium has been imposed mainly to protect depositor interests and ensure financial and banking stability. It will be a short-duration moratorium and there is absolutely no need for the public, particularly the depositors, to panic, ” said the LVB Administrator.
The bank has a deposit base of about ₹20,000 crore with ₹14,000 crore in term deposits and the balance in CASA (current and savings account). LVB’s advances as on date stood at a little over ₹17,000 crore.
Manoharan said that depositors have withdrawn ₹10 crore since the merger announcement on Tuesday. “We are confident of meeting depositors’ requirements. We have not sought liquidity support from the RBI so far,” he said.
He also added that the bank does not have any outstanding Tier-1 bonds and has ₹368-crore worth of Tier-2 bonds as on date.
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