Govt approves merger of crisis-ridden Lakshmi Vilas Bank with DBIL
New Delhi, Nov 25: The government on Wednesday approved the merger of crisis-ridden Lakshmi Vilas Bank (LVB) with the DBS Bank India Ltd (DBIL) with Union minister Prakash Javadekar asserting that there will be no further restrictions on the depositors regarding withdrawals other than the current moratorium.
The minister also assured depositors that Rs 20,000 crore of deposits with LVB are fully secured and they should not worry.
DBIL, a wholly-owned subsidiary of Singapore-based DBS Bank Ltd, had a total regulatory capital of Rs 7,109 crore as of June 2020.
The government had earlier on November 17 on the advice of the RBI imposed a 30-day moratorium on the crisis-ridden LVB restricting cash withdrawal at Rs 25,000 per depositor.
The RBI simultaneously placed in public domain a draft scheme of amalgamation of LVB with DBIL. The RBI had also superseded the board of the bank.
The Union Cabinet has approved the Scheme of Amalgamation of Lakshmi Vilas Bank Limited (LVB) with DBS Bank India Limited (DBIL), Javadekar told reporters, adding the decision will provide comfort to 20 lakh depositors and protect the services of 4,000 employees.
"The 20 lakh depositors and Rs 20,000 crore deposits are now fully secured. They need not worry. They should not rush, their deposits are in the best hand," he said.
Although the DBIL is well capitalised, it will bring in additional capital of Rs 2,500 crore upfront, to support credit growth of the merged entity.
Meanwhile, an official release said that with the approval of the scheme, "LVB will be amalgamated with DBIL from the appointed date, and with this there will no further restrictions on the depositors regarding withdrawal of their deposits".
The minister further said that those responsible for deteriorating financial health of the LVB would be penalised.
"...two more decisions have been taken that the board which has been removed, the liability will be fixed. Those who have made mistakes, will be punished. There will be improvement in overall oversight also so as not to repeat such bank deals in future. This is one of the big efforts of cleaning up the banking system," he said.
Javadekar emphasised that there is a need for improvement in oversight of the RBI.
"RBI should be able to comprehend the problem before it becomes unmanageable. If one can sense the lurking problems, it is easier to handle," the minister said.
The government had earlier on November 17 on the advice of the RBI imposed a 30-day moratorium on the crisis-ridden LVB restricting cash withdrawal at Rs 25,000 per depositor.
The RBI simultaneously placed in public domain a draft scheme of amalgamation of LVB with DBIL, a banking company incorporated in India under Companies Act, 2013, and having its Registered Office at New Delhi.
DBIL is a banking company licensed by RBI and operating in India through wholly-owned subsidiary model. The parent company DBS is a leading financial services group in Asia with presence in 18 markets and headquartered and listed in Singapore.
The combined balance sheet of DBIL would remain healthy even after amalgamation and its branches would increase to 600, the release said.
Started by a group of seven businessmen of Karur under the leadership of V S N Ramalinga Chettiar in 1926, LVB has 566 branches, and 918 ATMs spread across 19 states and 1 union territory.
"The speedy amalgamation and resolution of the stress in LVB is in line with government's commitment to a clean banking system while protecting the interests of depositors and the public as well as the financial system," it said.
It also said after inviting suggestions and objections from the public and stakeholders, the RBI prepared and provided a scheme for the bank's amalgamation for the government's sanction, well in advance of the end of the moratorium period so that restrictions on withdrawal faced by the depositors are minimised.
LVB is the second private sector bank after Yes Bank which run into rough weather during this year. In March, capital-starved Yes Bank was placed under a moratorium. The government rescued Yes Bank by asking state-run State Bank of India to infuse Rs 7,250 crore and take 45 per cent stake in the bank.
LVB's troubles started after it shifted its focus to lend to large businesses from SMEs. With soaring NPAs, the bank was put under the Prompt Corrective Action framework of the RBI in September 2019.
The Tamil-Nadu-based lender had sought the RBI's nod to amalgamate itself with Indiabulls Housing Finance and Indiabulls Commercial Credit in May 2019 to meet its capital requirements.
However, the deal could not get regulatory approval because of the RBI's aversion to let realty-focused entities into commercial banking.
On June 15, 2020, the bank had signed a preliminary, non-binding letter of intent with Clix Capital Services and Clix Finance India for a possible amalgamation with the Clix Group.
LVB posted a net loss of Rs 836.04 crore in the year to March 2020. The bank had recorded a net loss of Rs 396.99 crore during the second quarter ended September of this fiscal, which widened from Rs 357.17 crore in the same quarter a year ago.
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Tata-Airbus helicopter facility shining example of partnership in high-end manufacturing: Rajnath
Kolar (Karnataka) (PTI): Defence Minister Rajnath Singh on Tuesday said the investment into H-125 helicopter programme is "anticipated" to cross Rs 1000 crore, and create a number of jobs, and called it a "shining example" of mutually beneficial partnership with friendly countries in high-end manufacturing sector.
He was speaking at the inaugural ceremony of the final assembly line of H-125 helicopters here.
Prime Minister Narendra Modi and French President Emmanuel Macron virtually inaugurated the Airbus H125 light utility helicopter Final Assembly Line at Tata‑Airbus' facility at Vemagal Industrial Area in this district from Mumbai.
Singh, accompanied by his French counterpart Catherine Vautrin, congratulated Tata Advanced System and Airbus Helicopters on the inauguration of the project and recalled their earlier association as well.
"This project is a shining example of mutually beneficial partnership with friendly countries in high-end manufacturing sector," Singh said.
"The H-125 program investment is anticipated to exceed Rs 1000 crore and is likely to create direct and indirect employment opportunities for our skilled and hard working younger generation," he said.
Renowned for its exceptional reliability, versatility, and outstanding performance under diverse operating conditions, the H-125 has proven to be one of the most effective and trusted single-engine helicopters globally, he said.
He recalled that Tata Advanced Systems and Airbus had earlier joined hands for a project in Gujarat's Vadodara for the C-295 aircraft, which he described as a symbol of how Tata in particular and India in general can collaborate with international OEMs to contribute to the vision of a stronger India.
The Defence minister said "Make in India" and self-reliance have been the cornerstone of India's economic policy since 2014.
Singh recalled that this policy initiative was launched by PM Modi, under which India is committed to achieving self-reliance in critical technology and the manufacturing of high-end products and equipment through mutually beneficial partnerships.
"For more than a decade, India has been charting industrial development through large-scale infrastructure building, capital infusion in important sectors through a number of incentive schemes on the one hand, and providing a level playing field for facilitating investment on the other," he said.
He added that it has also been the government's focus to support small and medium industries and strengthen the startup ecosystem in particular. Overall, the focus has been on holistic industrial development, which not only caters to domestic demand but also addresses the needs of other countries.
Highlighting reforms in the defence sector, Singh said these measures have augmented the contribution of the private sector in the defence industrial ecosystem.
According to him, historically, Indian defence production was largely public sector-oriented due to requirements of high capital investment and long gestation periods, resulting in the private sector's contribution being far less than desired.
However, with reforms such as the corporatisation of ordnance factories, establishment of defence industrial corridors, and other initiatives to raise the private sector's share in total defence production, it now stands at almost a quarter of the country's total defence production.
Defence exports have also increased manifold, placing India among the top exporters in the world, he said.
Singh said the growth trajectory has given a massive boost to MSMEs and ancillary sectors, which have grown to more than 16,000 in number, with many foreign companies sourcing components from Indian MSMEs.
He invited companies to deepen the partnership through meaningful technology transfer and offer platforms to meet the security needs of other countries as well.
Union Civil Aviation Minister K Rammohan Naidu, who also attended the event said the H125 final assembly line set up by Tata and Airbus marks a defining moment for India's aerospace sector, calling it "a proud symbol of rising confidence in India's high-precision aerospace capabilities."
He described defence and civil aviation as "two strategic pillars of the Indo-French partnership" and said the new facility would reinforce "a single integrated aerospace ecosystem" by assembling both civil and defence variants.
Noting that India has risen from the 10th to the third largest civil aviation market in just 11 years, Naidu asserted that the country now has "the market, the export potential, the policy ecosystem, the skilled workforce and the strategic global partnerships to emerge as a rotary-wing manufacturing hub".
"The future of rotary aviation in South Asia will be designed, manufactured, certified, maintained and exported from India," he said, adding that the country is "not just flying high, but flying past all horizons" under the Make in India and Viksit Bharat 2047 visions.
Tata Advanced Systems CEO and MD Sukaran Singh said in this facility here, "we will start building helicopters without any government or defense orders."
"However, we will be ready to supply the defense forces as and when they want. The first helicopter will fly out this facility by mid 2027."
