Union Cabinet has approved the merger of capital-starved Lakshmi Vilas Bank (LVB) with DBS Bank India. The Reserve Bank of India on 17 November proposed the merger of the lender with the Indian arm of Singapore’s DBS Bank.
The 94-year-old LVB will now cease to exist and its equity completely wiped out. Its deposits will now be on the books of DBS India. Lakshmi Vilas is the second bank to need a rescue this year, and the third collapse of a major deposit-taking institution in 15 months and the first since the onset of the coronavirus pandemic.
As part of the amalgamation, DBIL will infuse fresh capital of Rs 2,500 crores into LVB. This also marks the first instance when India has turned to a foreign entity to bail out a struggling domestic bank. Under the deal, DBS got 563 branches, 974 ATMs and a $1.6 billion franchise in retail liabilities. Earlier, the RBI had placed LVB under a one-month moratorium till December 16, during which withdrawals for depositors have been capped at Rs 25,000.
About DBS Bank:
DBS was the first foreign bank to receive a banking licence after the central bank allowed foreign banks to set up a wholly-owned subsidiary in 2014. “With DBS likely to use digital capabilities to enhance its physical footprint in India, the proposed deal could lead to a 30-40% increase in Indian assets of DBS.
Important takeaways for all competitive exams:
Every year on Budget Day, the Finance Minister’s appearance outside Parliament attracts huge public attention.…
India’s ambitious Mumbai-Ahmedabad Bullet Train Project has crossed another important engineering milestone. On January 29,…
India is set to host a major diplomatic event that signals a renewed focus on…
Global living costs continue to rise amid inflation, currency movements, and demand for premium urban…
A national anthem is a special song that shows a country’s pride, history, and shared…
In a landmark and politically charged decision, the European Union has formally designated Iran’s powerful…