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Lakshmi Vilas Bank Crisis: RBI Appoints Committee of Directors to Run Day-to-Day Affairs

Shareholders had rejected appointment of seven directors, including the MD and CEO and auditors, at the AGM on September 25.

Shareholders had rejected appointment of seven directors, including the MD and CEO and auditors, at the AGM on September 25.

The Committee of Directors appointed by the RBI will exercise the discretionary powers of the MD and the CEO in the ad-interim.

The Reserve Bank of India (RBI) on Monday said day-to-day affairs of Lakshmi Vilas Bank will be run by Committee of Directors who will exercise the discretionary powers of the MD and the CEO in the ad-interim.

At the latest Annual General Meeting of Lakshmi Vilas Bank, last week, shareholders had disapproved seven of the board members from continuing. In its last result, the bank reported a negative tier one ratio of -1.83 percent.

Deposits in the June quarter stood at Rs 21,161 crore, down 27 per cent from year-ago levels and 1.3 per cent from a quarter ago. The news of vacuum at the top after the latest AGM can’t be received well by depositors.

With the Liquidity Coverage Ratio (LCR) of about 262 per cent as on September 27, 2020, against a minimum 100 per cent required by RBI, deposit-holders, bond-holders, account-holders and creditors are well safe-guarded.

The bank will continue to share information on the developments in the public domain as and when they materialise, and as required by applicable law, it said.

Meanwhile, last week, the shareholders also voted against the re-appointment of statutory auditors (P Chandrasekar LLP, Chartered Accountants) and branch auditors. The branch auditor is appointed in consultation with the statutory auditor.

The directors whose appointments were not cleared by shareholders include N Saiprasad, Gorinka Jaganmohan Rao, Raghuraj Gujja, KR Pradeep, BK Manjunath and YN Lakshminarayana Murthy.

According to people familiar with the development, shareholders rejected the appointments a time when the bank is facing a major financial crisis due to deterioration of asset quality and lack of capital.

LVB is in dire need of capital and has been scrambling to find a buyer. The private lender is in talks with Clix Capital for a merger and secure the much-needed capital.


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