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RBI restricts withdrawals at Rs 25,000 from Lakshmi Vilas Bank till December 16

The Reserve Bank of India (RBI) has capped withdrawal limit at Rs 25,000 from Lakshmi Vilas Bank till December 16 due to its detoriating financial condition and safeguard the interest of its customers till a resolution is reached.

India TV Business Desk India TV Business Desk
New Delhi Updated on: November 25, 2020 15:54 IST
Lakshmi Vilas Bank
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RBI restricts withdrawals at Rs 25,000 from Lakshmi Vilas Bank till December 16

The Reserve Bank of India (RBI) has capped withdrawal limit at Rs 25,000 from Lakshmi Vilas Bank till December 16 due to its detoriating financial condition and to safeguard the interest of its customers, until a resolution is reached. Lakshmi Vilas Bank is a Tamil Nadu-based private sector bank that has been placed under moratorium for a period of one month, the Finance Ministry said in a statement. Though a moratorium has been placed, some relaxations have been provided for expenses such as medical treatment, payment of higher education fees, and cost to cover marriage expenses. For such requirements, depositors will be able to withdraw more than Rs 25,000. However, for these transactions, RBI permission will be required.

In a statement, the RBI said in the absence of a credible revival plan, with a view to protect depositors' interest and in the interest of financial and banking stability, there was no alternative but to apply to the central government for imposing a moratorium under Section 45 of the Banking Regulation Act, 1949.

ALSO READ: Under moratorium, RBI proposes to merge Lakshmi Vilas Bank with DBS Bank

"Accordingly, after considering the Reserve Bank's request, the Central Government has imposed moratorium for thirty days effective from today," it said.

As per the moratorium order, Lakshmi Vilas Bank will not, without RBI's permission, "make, in the aggregate, payment to a depositor of a sum exceeding twenty-five thousand rupees lying to his credit, in any savings, current or any other deposit account, by whatever name called."

TN Manoharan, former non-executive chairman of Canara Bank, has been appointed as the administrator of the bank.

Meanwhile, the RBI has also placed in public domain a draft scheme of amalgamation of Lakshmi Vilas Bank (LVB) with DBS Bank.

(With inputs from PTI)

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