Lakshmi Vilas Bank Crisis: Laxmi Vilas Bank shares witnessed a huge decline today. The bank’s stock has a lower circuit of 20 percent. Shares fell 20 per cent to Rs 12.45. Earlier on Tuesday, the stock closed at Rs 15.55. On Tuesday, RBI acted on Lakshmi Vilas Bank and put it in the Moratorium. At the same time, the withdrawal limit was also fixed at 25 thousand rupees for a customer. After that the stock declined. Sale order of 30945341 shares of the company were seen, there was no buyer for them.
Financial condition is bad
In fact, the government has imposed Moratorium on Laxmi Vilas Bank (LVB) for a month. It has also set a withdrawal limit for the customers of the bank. The customers of the bank will not be able to withdraw more than Rs 25,000 from their account. Reserve Bank of India has said that the financial position of Lakshmi Vilas Bank has been continuously deteriorating. It has incurred losses in the last three years, due to which it has lost its net worth. Losses are expected to continue due to lack of any strategic plan, dwindling advances and rising non-performing assets.
Failed to raise capital
RBI also stated that the bank failed to raise sufficient capital to resolve its negative net worth and ongoing losses. Also, it has also experienced frequent withdrawal of deposits and low levels of liquidity. The central bank also emphasized that serious governance cases have come to light in Lakshmi Vilas Bank. And in recent years, his works have reduced his performance. It is worth noting that the bank was placed in the Prompt Corrective Action (PCA) framework in September 2019.
RBI plans merger
RBI has publicly introduced a draft scheme of merger with Lakshmi Vilas Bank’s DBS Bank. Its goal is to merge it before the ban period ends. A similar situation came to light in PMC Bank in September last year and Yes Bank in March this year. Please tell that Lakshmi Villas Bank was formed in 1926. The bank operates 566 branches and 918 ATMs in 16 states across the country. The bank had assured its customers that the current crisis would not affect their deposits.
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