LVB is the second private sector bank after Yes Bank which has run into rough weather during this year. The RBI imposed a 30-day moratorium on LVB, restricting cash withdrawals at Rs 25000 per month.
On 18th November 2020, the government on the advice of the Reserve Bank of India (RBI) placed Lakshmi Vilas Bank (LVB) under a one-month moratorium, replaced its board, and appointed TN Manoharan, former non-executive chairman of Canara Bank, as its administrator for 30 days. Cash withdrawals capped at Rs 25,000 per depositor.
On 19th November 2020, on the BSE index, LVB stock fell 20 percent or Rs 3.10 to Rs 12.40; while on NSE it crashed 19.94 percent or Rs 3.10 to 12.45.
The government has taken the step keeping in view of the private sector bank’s declining financial health. Further, the RBI has also proposed a scheme to merge the lender with DBS Bank.
In March, capital-starved Yes Bank was placed under a moratorium. The government rescued it by asking state-run SBI to infuse Rs 7,250 crore and take 45 percent stake in the bank.