Chennai: A week after the Reserve Bank of India (RBI) decided to palm off the 94-year-old Tamil Nadu-based Lakshmi Vilas Bank (LVB) free of cost, the issue has turned political with the Communist Party of India (CPI) voicing against the move.
Opposing the RBI’s move, CPI’s General Secretary D.Raja said within an hour of declaring moratorium of LVB, RBI has come out with the proposal to merge the bank with DBS Bank India, which clearly indicates that it was already decided by the RBI.
“Why such a hurry is not clear to anyone. Government should thoroughly enquire into the matter and stop the handing over of LVB to DBS Bank,” Raja said.
He said LVB has been making losses for the past few years due to mismanagement and bad loans given to known defaulters like Jet Airways, Religare, Cox and Kings, Coffee Day, Nirav Modi and others.
Raja said, the RBI instead of taking action on the erring top officials, has announced that LVB will be handed over to DBS Bank India, a subsidiary of DBS Bank of Singapore.
“In the larger interest of the depositors and customers of the bank as well as the retail investors of the bank, it is desirable to merge the bank with a public sector bank as has been done in many cases in the past,” Raja said.
According to him, handing over the bank to foreign bank smacks of the agenda of the government to appease foreign investors.
“The Prime Minister and the Finance Minister keep declaring loudly from the roof top about local-vocal and about Atmanirbhar,” Raja said.
On Tuesday, the RBI announced its decision to amalgamate the LVB with the DBS Bank India.
As per the draft amalgamation scheme, the RBI has said that on and from the appointed date, the entire amount of the paid-up share capital and reserves and surplus, including the balances in share/securities premium account of the transferor bank (LVB), shall stand written off.
On and from the appointed date, the transferor bank shall cease to exist by operation of the scheme, and its shares or debentures listed in any stock exchange shall stand delisted without any further action from the transferor bank, transferee bank (DBS Bank India) or order from any authority.
