Lakshmi Vilas Bank customers have withdrawn ₹10 crore since RBI's moratorium was announced last night
- Customers of
Lakshmi Vilas Bank(LVB) have withdrawn ₹10 crore since the Reserve Bank of India (RBI) announced a moratorium on transactions yesterday evening.
- The RBI has limited withdrawals to ₹25,000 per depositor for the next one month, until December 16.
- However, LVB’s newly anointed Administrator and former Canara Bank Chairman TN Manoharan believes the bank has enough liquidity to pay depositors and the moratorium may be lifted before the deadline hits.
Customers of Lakshmi Vilas Bank (LVB) have withdrawn ₹10 crore since the Reserve Bank of India (RBI) placed it under moratorium yesterday evening.
View all Offers
View all Offers
OnePlus Nord 2 5G (Gray Sierra, 8GB RAM, 128GB Storage) I Extra upto Rs.1000 off on Exchange₹ 29999Buy On
- 19% OFF
Redmi Note 10 (Aqua Green, 4GB RAM, 64GB Storage) -Amoled Dot Display | 48MP Sony Sensor IMX582 | Snapdragon 678 Processor₹ 12999₹ 15999Buy On
OnePlus Nord 2 5G (Blue Haze, 8GB RAM, 128GB Storage) I Extra upto Rs.1000 off on Exchange₹ 29999Buy On
- 18% OFF
Redmi 9A (Nature Green, 2GB RAM, 32GB Storage) | 2GHz Octa-core Helio G25 Processor | 5000 mAh Battery₹ 6999₹ 8499Buy On
- 18% OFF
Redmi 9 (Carbon Black, 4GB RAM, 64GB Storage) | 2.3GHz Mediatek Helio G35 Octa core Processor₹ 8999₹ 10999Buy On
“There is no run on the bank. Customers understand the fundamental strength of the institution,” said former Chairman of Canara Bank and the newly anointed Administrator of LVB, TN Manoharan.
TOP VIDEOS FOR YOUHowever, the process to prepare banks to withdraw ₹25,000 per depositor is still ongoing leading to ‘technical issues’ at certain locations. According to Manoharan, the software within branches, ATMs, and other aspects need to be revamped before they can be opened up again.
Advertisement“The books are closed and withdrawals are frozen when a moratorium is put in place. The regulator then permitted a ₹25,000 withdrawal limit. But the system can’t be released or opened up again as in. Software is getting updated to address that,” he explained during today’s press conference.
To address any shortage of cash at a particular branch, the manager has the option to either pull in funds from other branches or call on the currency chest.
Moratorium may end early
Even though Manoharan has only been at the helm for less than 24 hours, he is confident that the moratorium will be lifted before the deadline of December 16. According to him, there is enough liquidity with the bank to pay back the depositors.
On the downfall of the bank, he revealed the fault may lie in the bank’s focus shifting from retail loans to corporate lending. “Fresh slippages hiked gross NPA from 10% to 15% and then 25%. That is an alarming level of increase in the recent past,” he said.
Manoharan is also optimistic that the lifting of limits and the lifting of the moratorium will be coterminal.
LVB customers can withdraw upto ₹5 lakh for emergencies
Even though withdrawals have been limited to ₹25,000 per customer for the next one month, until December 16, there is a provision for customers to withdraw upto ₹5 lakh or the entirety of their account balance for emergencies. It includes medical expenses, marriage, or higher education among other situations for which evidence can be filed with the bank.
AdvertisementHowever, the power to approve these requests won’t lie with the branch managers. Instead, the request shall be passed onto the RBI, who will then yield the final verdict on whether or not the money can be released.
One of the questions that remains unanswered how the Fixed Deposits (FDs) at the bank will be resolved. While LVB offers an interest rate of up to 7%, DBS Bank India's rate is at most 4.5%.
However, the fate of FDs and other products of the bank do not lie with the current board that been appointed by the RBI. The new management, which will step in once the amalgamation process is complete, will determine the terms after the infusion of capital, according to Mahoharan.
AdvertisementUpdate note: The withdrawal figure was incorrectly cited as ₹10,000 crore and changed to ₹10 crore.
EXCLUSIVE: Capgemini HR head explains why the French IT major is going crazy hiring in India and around the world
IndiaMart and JD Mart gear up for a legal battle over copyright infringement — even as Justdial calls IndiaMart’s allegations ‘baseless’
Cipla launches Covi-G — a new rapid antibody detection test for COVID-19 which will give you results in less than 10 minutes
- Fino Payments Bank files papers for ₹1,300 crore IPO
- OfBusiness, a platform that helps SMEs get raw materials, becomes the newest unicorn from India
- Tokyo Olympics: India's P V Sindhu loses to world number one Tai Tzu Ying of Chinese Taipei in the semis
- Droom founder explains why he is considering a US IPO and where he intends to spend the money
- 21 new COVID-19 cases reported at Tokyo Olympics, no athletes among them