MUMBAI, Nov. 17 (Xinhua) -- India's Central Bank has issued a draft scheme to amalgamate the country's private sector bank The Lakshmi Vilas Bank (LVB) with DBS Bank, the Indian subsidiary of Singapore based DBS Bank, a statement by the Reserve Bank of India (RBI) said, Tuesday.
Earlier in the day, the LVB, with gross advances of 2.2 billion U.S. dollars and deposits of 2.8 billion U.S. dollars through its networks of 563 branches as on September 30, was placed under moratorium till December 16 by the RBI.
The financial position of the LVB, established in 1926, has undergone a steady decline with the bank incurring continuous losses over the last three years, eroding its net-worth, said the RBI statement.
"In absence of any viable strategic plan, declining advances and mounting non-performing assets (NPAs), the losses are expected to continue. The bank has not been able to raise adequate capital to address issues around its negative net-worth and continuing losses. Further, the bank is also experiencing continuous withdrawal of deposits and low levels of liquidity. It has also experienced serious governance issues and practices in the recent years which have led to deterioration in its performance," an RBI statement said.
As per the proposed draft scheme, DBS Bank India, a subsidiary of the Singapore Bank, will bring in additional capital of 335.6 million U.S. dollars upfront, to support the credit growth of the merged entity. Enditem