The Indian government on Wednesday approved merger of Lakshmi Vilas Bank (LVB) with DBS Bank India Ltd (DBIL) and removed restrictions on withdrawal of deposits at the crisis-ridden bank.
“Cabinet approves Scheme of Amalgamation of Lakshmi Vilas Bank with DBS Bank India Limited; with this there will no further restrictions on the depositors regarding withdrawal of their deposits,” the official spokesperson said in a tweet.
Federal minister Prakash Javadekar said that those responsible for deteriorating financial health of the LVB would be penalised. He added that the decision will provide comfort to 2 million depositors, while protection 4,000 jobs.
The government had on November 17, on the advice of the Reserve Bank of India, imposed a 30-day moratorium on the LVB, restricting cash withdrawal at Rs 25,000 ($338) per depositor.
LVB is the second private sector bank after Yes Bank which has run into rough weather during this year. The government rescued the capital-starved bank by getting state-run State Bank of India to infuse Rs 72.50 billion for a 45 per cent stake.