Lakshmi Vilas Bank

The Lakshmi Vilas Bank Ltd (LVB) was formed by a group of 7 businessmen in the year 1926. It has its registered office at Karur under the leadership of V.S.N. Ramalinga Chettiar. It is headquartered in Chennai.

Key Points

  • The Bank was incorporated under the Indian Companies Act 1913, during the British rule in the nation.
  • In 1958, it became a scheduled commercial bank by obtaining a license from RBI. It has a presence all over the country.
  • In April 2019, the Lakshmi Vilas Bank board approved its merger with the country’s 2nd largest housing finance company, Indiabulls Housing Finance Ltd. But in October 2019, RBI rejected this merger plan.

Lakshmi Vilas Bank under Moratorium

  • For the last 3 years, the Bank had been posting continuous losses. Its NPA started to mount leading to a situation of capital erosion. The Bank was placed under Prompt Corrective Action (PCA) since September 2019.
  • In the absence of any viable alternative, the Government of India, in consultation with the Reserve Bank of India, has placed LVB under Moratorium for a period of 30 days till 16th December 2020, as per the provisions of Sec 45 of Banking Regulation Act 1949.
  • Also, under Sec 35 A of Banking Regulation Act 1949, LVB shall not make any investment, make payments to depositors exceeding Rs.25, 000, incur any liability or agree to disburse any payment, dispose off any properties, enter into any compromise or agreement, etc.

Banking Regulation Act 1949

The Banking Regulation Act, 1949 is ratification to regulate all the banking organizations in India. It was passed as the Banking Companies Act 1949 and came into force on 16 March 1949. Later, from 1 March 1966, it was changed to the Banking Regulation Act 1949. Section 45 of regulation gives the power to RBI for applying to the Central Government for the suspension of business by a banking company and to prepare a scheme of reconstitution or amalgamation. Section 35 A gives the power to RBI to give directions to banking entities in the country.