swadeshi jagran manch logo

Proposed LVB-DBS Merger Falls Foul Of PM's Atmanirbhar Bharat Goal: SJM

Swadeshi Jagran Manch requested the Reserve Bank of India to re-examine the proposed amalgamation of the Lakshmi Vilas Bank Ltd. with the DBS Bank India Ltd. DBIL is a wholly-owned subsidiary of DBS Bank Ltd, Singapore, which in turn is a subsidiary of Asia’s leading financial services group, DBS Group Holdings Limited. In a letter addressed to RBI Director Shaktikanta Das, SJM national co-convenor Ashwani Mahajan argued that the depositors' interests should be protected without "compromising national interest".

Mentioning that LVB has a larger branch network than that of all foreign banks combined in the country, he dubbed the proposed merger as "a back-door entry to a foreign banking entity into the Indian market". Alleging that DBS would get access to LVB deposits in excess of Rs.20,000 crore without paying any price for the acquisition, Mahajan contended that the RBI's proposal lacks transparency. According to him, India's central bank had not conducted a comprehensive valuation exercise and a transparent invitation of bids from interested parties.

The letter further highlighted that there is not a single case of merging an Indian bank with a foreign entity in the last 60 years. Observing that the RBI's move is contrary to PM Modi's clarion call of Atmanirbhar Bharat, the SJM national co-convenor added that LVB shall be exposed to the risks of a foreign bank. He suggested that the RBI can either recapitalize LVB with the help of Indian banks or merge it with Indian banks/ strong NBFCs. 

Lakshmi Vilas Bank Ltd. has been placed under moratorium by the RBI until December 16 as per Section 35A of the Banking Regulation Act, 1949. This action has been attributed to the bank's serious governance and management issues, declining advances, mounting NPAs and low levels of liquidity. Moreover, the RBI has superseded the bank's Board of Directors for a period of 30 days to protect the interest of the depositors and to ensure proper management.

Consequent upon the supersession of the Board of Directors, India's central bank appointed TN Manoharan, the former non-executive Chairman of the Canara Bank as the Administrator of the Lakshmi Vilas Bank Ltd. In the moratorium period, the customer of this bank shall not be able to withdraw more than Rs.25,000 from all accounts combined. The RBI has invited suggestions and objections on the draft scheme of amalgamation from members, depositors and other creditors of the LVB and DBIL till 5 pm on November 20. 


Share This

Click to Subscribe