Troubled Lakshmi Vilas Bank receives indicative non-binding offer from Clix Group

Troubled Lakshmi Vilas Bank receives indicative non-binding offer from Clix Group
Lakshmi Vilas BankBCCL
Beleaguered small private bank Lakshmi Vilas Bank (LVB) on Thursday said it has received an indicative non-binding offer from Clix Group.

The bank had earlier said it was in talks for amalgamation with Clix Group, that comprises Clix Capital Services Private Ltd, Clix Finance India Private Ltd and Clix Housing Finance Private Ltd.

In a regulatory filing, the LVB said it has received an indicative non-binding offer from Clix Group but did not share any other details about the offer.

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In a regulatory filing on September 15, the company said that the mutual due diligence with Clix Capital is "substantially complete", and the parties are in discussions on the next steps.

At the recent annual general meeting of the LVB, the shareholders had voted out seven directors, including the promoter and Managing Director and CEO, and the bank is now run by a three-member Committee of Directors.

On Wednesday, the LVB said credit rating agency Brickwork Ratings India Pvt Ltd, has downgraded the rating from "BWR BB+" (Credit Watch with Developing Implications) to "BWR B+" (Credit Watch with Negative Implications) for its Unsecured Redeemable Non-Convertible Subordinated Lower Tier II Bonds-Series VII (Option B) of Rs 50.50 crore.

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Meanwhile, shareholder of the bank R. Subramanian has moved the Madras High Court to direct the Central government, the Reserve Bank of India and the Securities and Exchange Board of India to suspend the LVB's board and appoint an administrator.

Subramanian contended that the mismanagement has resulted in gross non-performing assets (NPA) leaping from 2.67 per cent in 2017 to 15.30 per cent in 2019 and stretching to 25.39 per cent in March 2020.

He said Religare Finvest Ltd had deposited Rs 400 crore on November 11, 2016 and Rs 350 crore on January 5, 2017 with the LVB, and the bank extended loans of approximately Rs 720 crore to ARHC Holdings and its subsidiary Ranchem against the said deposits without any documents of consent of the depositor company.

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He said the LVB neither obtained any documents nor consent from the depositor Religare Finvest to stand as surety.

Subsequently, the LVB illegally adjusted deposit proceeds to loan accounts and the same was questioned by Religare Finvest which issued legal notice alleging the said appropriation of deposit proceeds to said loan accounts.

The bank also violated SEBI regulations by not reporting this material development to the stock exchanges, he said.

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It has to be seen how Clix Group has looked at this issue while making its indicative non-binding offer to LVB.

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