In a huge relief to over 4,000 employees of Lakshmi Vilas Bank, RBI-appointed administrator for Lakshmi Vilas Bank TN Manoharan said on Wednesday that DBS Bank will absorb all of them after the merger. He said he was confident about the timely merger of Lakshmi Vilas Bank with DBS Bank. DBS Bank may also rope in more experienced professionals to carry out a digitisation drive at the troubled bank.
Manoharan, during a virtual press meet, said the troubled bank has enough liquidity to pay back depositors. Scores of Lakshmi Vilas Bank customers have gone on panic mode since the moratorium was imposed on the bank operations yesterday. Manoharan says the banks are gearing up to facilitate customers, especially senior citizens and women customers. He assured that the bank will try to address the issues being faced by customers soon.
On the issue of miscommunication regarding moratorium, Manoharan said it has been communicated to all branches in India. "We have communicated this to all branches in India as to what should be the message for customers. Some may not have this information so we have put the teams on alter mode. We have told the employees to pursue the matters with regards to withdrawal and deposits like the demonetisation scenario," he added.
On the question of liquidity issues at the bank, Manoharan said the bank has made adequate measures to provide cash to all customers within the prescribed limit. He also said he was confident the scenario will be different from tomorrow. Will there be any changes in the FD rates after the merger? Manoharan said the bank will not be able to interfere in this matter and that it'll be decided by the new management.
He said LVB has deposits worth Rs 20,050 crore and advances worth Rs 16,017 crore as per the latest figures. Jewellery loans have gone up in recent years, he said. He said he was confident that moratorium will be lifted on December 16 and that withdrawal limit will also go away by then. "I hope that the moratorium and withdrawal limit may be lifted together," he said.
On the low withdrawal limit, he said customers can also withdraw more than Rs 25,000 but that facility has been granted in special cases only. The customers can withdraw up to Rs 5 lakh in case of a medical emergency, for higher education and marriage or any other emergency, he said. He said the bank's asset quality had deteriorated and that amalgamation was the only way. "To facilitate the smooth transition, the moratorium was necessary," he said.
Those who want to withdraw Rs 5 lakh will have to submit basic evidence like purpose and some basic proof and the sanction will be made after the RBI's approval, he said, adding that customers have withdrawn Rs 10 crore since yesterday. While DBS Bank operates just 35 branches in 25 cities across India currently, it'll get a chunk of LVB branches -- around 566 -- at one go. The RBI has also given more flexibility to DBS by giving the option of merging branches of LVB as per its convenience.
As per the RBI, the financial position of Lakshmi Vilas Bank had undergone a steady decline over the last three years. The troubled lender saw the capital adequacy ratio fall to 0.17 per cent in June 2020 as against the minimum 9 per cent. The bank had Rs 13,827 crore in outstanding loans and deposits worth Rs 21,443 crore at the end of FY20.