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Home » IANS » RBI’s decision a part surprise: Former LVB Director

RBI’s decision a part surprise: Former LVB Director

By IANS
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By Venkatachari Jagannathan

Chennai, Nov 17 (IANS) The Reserve Bank of India’s (RBI) decision to propose amalgamation of Lakshmi Vilas Bank (LVB) with DBS Bank India came partly as a surprise, said an outgoing Director of LVB.

“The RBI could have done this earlier. Now it has come as a part surprise,” Sakti Sinha, member of LVB Board of Directors that was superceded by RBI on Tuesday.

Sinha said apart from Clix group that comprises Clix Capital Services Private Ltd, Clix Finance India Private Ltd and Clix Housing Finance Private Ltd – two other NBFCs and private banks showed interest in the 96-year old private bank.

According to Sinha, the deal with Clix didn’t happen because of differences in valuation.

Further, the RBI might not have approved the same as the lending policy of NBFC and that of the central bank does not go together, Sinha said.

In a regulatory filing last month, the LVB said it has received an indicative non-binding offer from Clix Group but did not share any other details about the offer.

Queried about majority shareholders voting against RBI’s proposal to amalgamate with DBS Bank India – as had happened with the shareholders voting out seven directors including a promoter director and Interim Managing Director and CEO S. Sundar- Sinha said RBI will not take it lightly.

According to him, DBS Bank India is a good and strong bank.

Meanwhile, shareholder of the bank R. Subramanian had moved the Madras High Court to direct the Central government, the Reserve Bank of India and the Securities and Exchange Board of India to suspend the LVB’s board and appoint an administrator.

Subramanian contended that the mismanagement has resulted in gross non-performing assets (NPA) leaping from 2.67 per cent in 2017 to 15.30 per cent in 2019 and stretching to 25.39 per cent in March 2020.

He said Religare Finvest Ltd had deposited Rs 400 crore on November 11, 2016 and Rs 350 crore on January 5, 2017 with the LVB, and the bank extended loans of approximately Rs 720 crore to ARHC Holdings and its subsidiary Ranchem against the said deposits without any documents of consent of the depositor company.

He said the LVB neither obtained any documents nor consent from the depositor Religare Finvest to stand as surety.

Subsequently, the LVB illegally adjusted deposit proceeds to loan accounts and the same was questioned by Religare Finvest which issued legal notice alleging the said appropriation of deposit proceeds to said loan accounts.

The bank also violated SEBI regulations by not reporting this material development to the stock exchanges, he said.

(Venkatachari Jagannathan can be contacted at [email protected])

–IANS

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(This story has not been edited by Newsd staff and is auto-generated from a syndicated feed.)
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