Lok Sabha Question No. 87 (STARRED), answered on 2021-02-08
Subject: Lakshmi Vilas Bank
Ministry: FINANCE
Asked by: S. Ramalingam, A. Ganeshamurthi

## GOVERNMENT OF INDIA

## MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA STARRED QUESTION NO\_ *87 Lakshmi Vilas Bank

## *87. SHRI RAMALINGAM S: SHRI A GANESHAMURTHI:

Will the Minister of FINANCE be pleased to state:

- whether the Union Government has recently declared Lakshmi Vilas Bank to be bankrupt due to financial crisis and increasing losses and if so, the details thereof; heavy
- whether the Reserve Bank of India (RBI) has constituted any committee to look into the Bank s functioning and reasons for its bankruptcy and if the details thereof; SO,
- C the total number of Lakshmi Vilas Bank s branches functioning at present and the total number of customers maintaining accounts in these branches with the total volume of deposits therein; and along
- whether the Union Government has taken any measures to protect the interests of the Bank' $ customers and if so, the details thereof?

## ANSWER

The Finance Minister (SMT. NIRMALA SITHARAMAN)

- (a) to (d): A statement is laid on the Table of the House:

Statement for Lok Sabha Starred Question no. *87 for 8 February regarding (LLakshmi Vilas Bank" by SHRI RAMALINGAM S. and SHRI A. GANESHAMURTHI, Member of Parliament 2021,

(a) to (d): Reserve Bank of India (RBD), into consideration, inter alia, a steady decline in Lakshmi Vilas financial   position as a result of bank continuous  losses, mounting  non-performing assets,  declining   advances; continuous withdrawal of deposits, low level of liquidity, absence of any viable strategic plan and the bank s inability to raise adequate capital to address issues atound its negative net worth, made an application to the Central Government under sub-section (4) of section 45 of the Regulation the bank Based on RBIs application, Central Government imposed a moratorium on the, bank taking incurring Banking Act;

Subsequently, with a view to protect depositors' interest and in the interest of fnancial and stability, in terms of the provisions of sub-sections (4) to (6) of section 45 of the RBI, after comments from vatious stakeholders including the banks concerned and their members, depositors and other creditors and after consideting the comments received, placed before the Central Government a scheme of amalgamation of Lakshmi Vilas Bank with DBS Bank India Limited (DBIL) for its sanction: The Central of section 45 of the sanctioned the Lakshmi Vilas Bank Limited (Amalgamation with DBS Bank India Limited) Scheme, 2020, amalgamating Lakshmi Vilas Bank with DBIL with effect from 27.11.2020. Consequent to the amalgamation, all branches of Lakshmi Vilas Bank functioning as branches and their customers including depositors began operating their accounts a8 customers of DBIL. The scheme specifically protected the interest of Lakshmi Vilas Banks depositors by providing for opening of a corresponding and similar deposit account in DBIL and it with the full amount banking Act; inviting Act, began crediting

With regard to total number of branches, deposits and customers of the bank; RBI has informed that as On 31.10. 051 customers, of whom 21.17 lakh had only deposit accounts with the bank 20,0 unique

With regard to the manner of into Lakshmi Vilas Bank $ functioning; RBI has informed that the bank was placed under RBTs Prompt Corrective Action framework in September 2019 and was under its close supervisory watch: The supervisory function in RBI is performed under the guidance of its Boatd for Financial Supervision; which is a committee of RBIs Central Board and is constituted under the Reserve Bank of India (Boatd for Financial Supervision) Regulations, 1994 made by the Central Board. looking