Private sector lender Lakshmi Vilas Bank (LVB), which recently ousted seven directors including managing director and chief executive officer (MD & CEO) S Sundar, on Thursday said that its board has approved raising of up to Rs 500 crore through issuance of shares on rights basis to existing shareholders. This is subject to requisite regulatory approvals.
"The board at its meeting held today i.e. October 15, 2020 have considered and approved, inter-alia, subject to the necessary approvals, the raising of funds by issuance and allotment of equity shares or such other eligible securities of the bank, for an aggregate amount of up to Rs 500 crore, by way of a rights issue," Lakshmi Vilas Bank said in a filing to the BSE.
The term and conditions for right issue of bank's shares will be decided by the board or a duly constituted committee of the board at a later date, it said.
In an unprecedented move, LVB shareholders did a coup of sorts by voting out seven directors including both its promoters, and the newly RBI-appointed CEO S Sundar at its annual general meeting (AGM) in September last month. The bank's shareholders were not too happy with the past management as the 94-year old bank had been a wealth destroyer. It has been making losses for the last three years. Gross NPAs have jumped to 25 per cent, meaning a fourth of the loan of the bank under default.
Following this, the Reserve Bank of India (RBI) formed a team of three members to run the bank under Meeta Makhan as chairperson and Shakti Sinha and Satish Kumar Kalra as members. Currently, day-to-day operations are managed by a committee of directors.
Last week, the Chennai-headquartered bank received a non-binding offer from Aion-backed non-banking finance company Clix group for a merger, which is pending for approval with the RBI.
Meanwhile, shares of Lakshmi Vilas Bank closed trade at Rs 17.80, down 2.78 per cent, against the previous closing price of Rs 18.30 on the BSE.
By Chitranjan Kumar