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Troubled private sector lender Lakshmi Vilas Bank (LVB) is hoping to go through with the proposed deal with Clix Group and outlined capital raising as its key priority.
“From our side, we are pursuing the deal. Our advisors have said that the due diligence is almost complete. It got slightly disrupted due to the Covid-19 situation and instead of September 15 it should be done a bit later,” said Shakti Sinha, who is a member of the Committee of Directors set up by the Reserve Bank of India (RBI) to look after the daily affairs at LVB.
“Raising capital is priority number one. We owe it to our depositors that bank functions,” he told BusinessLine.
The bank has been in talks with Clix Capital, co-founded by former GE Capital’s CEO, Pramod Bhasin, for a probable stake sale and had signed a preliminary, non-binding letter of intent with the Clix Group.
No Plan B
On talks of a potential merger with a public or private sector bank, Sinha, who is also a non-executive, independent director on the bank’s board, said the lender is not aware of a Plan B.
Punjab National Bank on Wednesday said that it has not received any instructions from the RBI to get ready to take over Lakshmi Vilas Bank. “It is clarified that the bank has not received any such instructions from RBI,” it said in a regulatory filing.
Sinha also expressed confidence that the bank’s deposit base will not be impacted due to the turmoil at the board level. “Here there will be no real change sense except for a few people at the top. We are not panicking. It is an old bank with a loyal depositor base of about 23 lakh,” Sinha said.
Confident that the situation at the lender will soon stabilise, he added that he expects the Committee of Directors to be a short-term arrangement only until a Managing Director and CEO is appointed by the RBI.
“I see the committee of directors, acting on behalf of the MD as a very short term arrangement. It is only an emergency arrangement till the MD joins, then the board functions separately and the MD functions separately as it should be,” he said.
Recommendation for a new MD
The board of LVB had earlier proposed three names for MD and CEO to RBI. The Committee of Directors has also shortlisted names for a statutory auditor and has sent its recommendations to the RBI, Sinha said.
LVB has been facing headwinds after shareholders rejected the appointment of seven directors and statutory auditors. The RBI then stepped in and approved that, day-to-day affairs of the lender will be run by a Committee of Directors (CoD) composed of three independent directors including Sinha.
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