Lakshmi Vilas Bank under a moratorium, withdrawal limit capped to Rs 25,000
New Delhi : The Central government has imposed a moratorium on Lakshmi Vilas Bank, capping the withdrawal limit to Rs 25,000 in a month, said the Ministry of Finance. However, depositors will be allowed to withdraw an amount of more than Rs 25,000 with an approval from RBI for purposes such as medical treatment, payment of higher education and marriage expenses, the ministry said.
The decision by the government has been taken in a view of deteriorating financial health of the bank in recent days.
In a separate statement, the RBI said that in the absence of a credible revival plan, there was no alternative but to apply to the central government for imposing a moratorium under Section 45 of the Banking Regulation Act, 1949, in order to protect the interest of its depositors and to ensure financial and banking stability.
Lakshmi Vilas Bank shares ended 1 per cent lower at Rs 15.50 apiece on the BSE earlier on Tuesday.
Lakshmi Vilas Bank, which needed capital urgently due to its worsening asset quality, has been scrambling to find a buyer for the past one year. It was reportedly in talks with Clix Capital for capital infusion and a possible merger.
The main trouble for the bank started in the year 2019 when RBI rejected its proposal of merger with Indiabulls Housing Finance.