The banking regulator Reserve Bank of India (RBI) said it has excluded Lakshmi Vilas Bank (LVB) from the Second Schedule of the RBI Act. This was after LVB merged with DBS Bank India.
RBI stated, “We advise that the “Lakshmi Vilas Bank Ltd” has been excluded from the Second Schedule to the Reserve Bank of India Act, 1934 with effect from November 27, 2020 vide Notification DOR.PSBD.No.1849/16.01.067/2020-21 dated December 17, 2020, which is published in the Gazette of India (Part III - Section 4) dated January 16 – January 22, 2021.”
In September 2020, the RBI has excluded six public sector banks following their merger with other banks. The six banks were Syndicate Bank, Oriental Bank of Commerce (OBC), United Bank of India, Andhra Bank, Corporation Bank, and Allahabad Bank.
All banks which are included in the Second Schedule to the Reserve Bank of India Act, 1934 are Scheduled Banks. These banks comprise Scheduled Commercial Banks and Scheduled Co-operative Banks.
But the regulator may exclude the bank if it finds the bank is conducting affairs to the detriment of the interests of its depositors, or bank which goes into liquidation or otherwise ceases to carry on banking business among other reasons.
Tamil Nadu-based Lakshmi Vilas Bank (LVB) with pre-independence lineage ran into trouble. After a series of events, last year, RBI had announced November 27 as the effective date of merger for LVB with DBS Bank India Ltd. The RBI had said in a statement that all the branches of LVB will function as branches of DBIL with effect from November 27.
Started by a group of seven businessmen of Karur in Tamil Nadu under the leadership of V S N Ramalinga Chettiar in 1926, LVB has 566 branches and 973 ATMs spread across 19 states and Union Territories.
With non-performing assets (NPAs) soaring, the bank was put under the prompt corrective action framework of the RBI in September 2019.
LVB is the second private sector bank after Yes Bank that has run into rough weather this year.
In March, capital-starved Yes Bank was placed under a moratorium. The government rescued Yes Bank by asking State Bank of India (SBI) to infuse Rs 7,250 crore and take 45 per cent stake in the lender.