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regular-article-logo Tuesday, 05 November 2024

Centre imposes withdrawal cap at Lakshmi Vilas Bank

RBi advises govt to place the bank under one-month moratorium

Our Bureau And Agencies New Delhi Published 17.11.20, 08:57 PM
The RBI has proposed to merge Lakshmi Vilas Bank with DBS Bank.

The RBI has proposed to merge Lakshmi Vilas Bank with DBS Bank. Shutterstock

The Centre on Tuesday imposed a withdrawal cap for depositors of Lakshmi Vilas Bank at Rs 25,000 per person, after placing the institution under a one-month moratorium and suspending its board.

In view of the plummeting financial health of the financial lender, the Reserve Bank of India had advised the government to take the decision.

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The RBI in a statement said in the unavailability of a substantial revival plan, with a view to protect depositors’ interest and keeping in mind the financial stability of banking, there was no other way but to urge the government to introduce a moratorium under Section 45 of the Banking Regulation Act, 1949.

"Accordingly, after considering the Reserve Bank's request, the Central Government has imposed a moratorium for thirty days effective from today," the statement read.

As per the directions in the moratorium, Lakshmi Vilas Bank will not "make, in the aggregate, payment to a depositor of a sum exceeding twenty-five thousand rupees lying to his credit, in any savings, current or any other deposit account, by whatever name called," without the RBI’s permission.

Former non-executive chairman of Canara Bank TN Manoharan has been appointed as the administrator of Lakshmi Vilas Bank.

The RBI has also publicly introduced a draft scheme proposing the merging of Lakshmi Vilas Vilas Bank (LVB) with DBS Bank.

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