Mumbai . The government has imposed a ban on private sector Lakshmi Vilas Bank undergoing financial crisis for a month. Under this, bank account holders will be able to withdraw up to Rs 25,000. Along with this, the government also announced plans to acquire Laxmi Vilas Bank along with DBS India. The government has taken this step following the advice of the Reserve Bank of India (RBI) in view of the bank’s poor financial condition. The Reserve Bank of India said in a statement on Tuesday that the decision has been taken in the interest of the depositors in the event of the bank not presenting a credible revival plan. Also, the interests of banking and financial sector stability have been taken care of. The Reserve Bank has also removed the board of directors of Lakshmi Vilas Bank and appointed TN Manoharan, former non-executive chairman of Canara Bank, as its administrator for 30 days.
The central bank said that there was no option left. Therefore, under Section 45 of the Banking Regulation Act 1949, the central government has imposed a ban on the private sector bank. “After considering the consultation with the Reserve Bank, the central government has imposed restrictions on the bank for 30 days from today (Tuesday),” the statement said. According to the order, Laxmi Vilas Bank savings without RBI’s permission , Shall not pay more than Rs 25,000 in aggregate to any depositor from current or any type of deposit account. Meanwhile, the Reserve Bank has also made public the draft plan of Laxmi Vilas Bank’s merger with DBS Bank. The RBI said, “Upon approval of the merger plan, DBS Bank India Ltd. to take the process forward. (DBIL) Singapore DBS Bank will invest Rs 2,500 crore (463 million Singapore dollars). It will be financed entirely from DBS’s existing resources. “Lakshmi Vilas Bank has become the second private sector bank to be in trouble this year after Yes Bank. Restrictions were imposed on Yes Bank in March. The government then raised Yes Bank with the help of State Bank of India (SBI). SBI had infused Rs 7,250 crore in return for a 45 percent stake in Yes Bank.
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