The National Stock Exchange (NSE) has announced that it will be suspending trading on the shares of the Lakshmi Vilas Bank (LVB) with effect from today onwards.
The development comes after the Union Cabinet on Wednesday approved the merger of the bank with DBS Bank India Ltd. The moratorium period on the bank ends on Thursday.
“In pursuance of Regulation 3.1.2 of the National Stock Exchange (Capital Market) Trading Regulations Part A, it is hereby notified that the following security will be suspended from trading w.e.f. November 26, 2020 (i.e. closing hours of trading on November 25, 2020),” the NSE said in a circular referring to Lakshmi Vilas Bank.
From November 27 (Friday) the 94-year-old Karur-headquartered LVB will cease to exist officially and be amalgamated with DBS Bank India Ltd.
On last Tuesday (November 17), the government placed Lakshmi Vilas Bank under a one-month moratorium, superseded its board and capped withdrawals at Rs 25,000 per depositor. The step was taken by the government, on the advice of the Reserve Bank, in view of the declining financial health of the private sector lender.
Besides, the Reserve Bank of India said that the amalgamation will come into force on November 27. All the branches of the Lakshmi Vilas Bank Ltd will function as branches of DBS Bank India Ltd with effect from this date, it said.
“Customers, including depositors of the Lakshmi Vilas Bank Ltd. will be able to operate their accounts as customers of DBS Bank India Ltd with effect from November 27, 2020. Consequently, the moratorium on the Lakshmi Vilas Bank Ltd. will cease to be operative from that date. DBS Bank India Ltd is making necessary arrangements to ensure that service, as usual, is provided to the customers of the Lakshmi Vilas Bank Ltd,” said the RBI statement.
LVB is the third bank to be placed under moratorium since September last year after the cooperative bank PMC in 2019 and private sector lender Yes Bank this March. While Yes bank has successfully been revived under the guidance of State Bank, the PMC resolution is still a far cry.
On Wednesday, the LVB’s shares on the NSE closed at Rs 7.65, higher by 4.79 per cent from its previous close.