InvestorQ : Do you see the takeover of Lakshmi Vilas Bank by DBS bank as positive?
ishika Banerjee made post

Do you see the takeover of Lakshmi Vilas Bank by DBS bank as positive?

Answer
image
7 days ago
Follow

Many analysts, broking / investment houses and even rating agencies have commended the speed and urgency that the RBI showed in bringing the LVB issue under control. LVB had slipped into problems after the deal to sell out to Indiabulls failed to get RBI approval.

No less an agency than Standard & Poor has lauded the prompt action by the RBI and the government in timely intervention to rescue the beleaguered Lakshmi Vilas Bank after the bank showed distinct signs of slipping into solvency crisis and possible default.

RBI asked DBS Bank Ltd, part of DBS Singapore, to take a controlling stake in LVB. This request is unique because it is the first time that a foreign bank, other than a PSU bank, has been called upon by the RBI to rescue a troubled bank. In the past, it was always PSU banks that would have to take the responsibility.

According to S&P, speedy and timely action by the RBI and supported by the government has precluded any systemic risk. Also, the 1-month moratorium will pre-empt any major run on deposits at LVB. Proper management was the key after recent fiascos like PMC Bank and Yes Bank.

4 Views