Page 8 - Banking Finance November 2019

RBI CORNER

RBI vides merger of PMC Bank’s withdrawal limit increased to Rs 40,000 by
Lakshmi Vilas Bank & RBI
In a recent movement, the RBI had announced that it had increased the with-
Indiabulls Housing Fi-
drawal limit for customers of Punjab and
nance Maharashtra Cooperative (PMC) Bank to Rs
According to the statement of 40,000. It further said that this is inclusive of the
Lakshmi Rs 25,000 allowed earlier.
Vilas The RBI states, “The Reserve Bank of India, after
Bank reviewing the bank’s liquidity position and its abil-
Ltd, the ity to pay its depositors has decided to further enhance the limit for withdrawal
RBI has to Rs 40,000, inclusive of Rs 25,000 allowed earlier. With the above relaxation,
not ap- about 77% of the depositors of the bank will be able to withdraw their entire
proved account balance."
its merger with Indiabulls Housing
Finance Ltd. Based on a complaint filed by the bank, the central bank said that based against
its officials and borrowers associated with the fraud and financial irregularities
The Lakshmi Vilas Bank (LVB) said in in the bank and manipulation of its books of accounts, the Economic Offences
a stock exchange filing, "This is to in- Wing (EOW), Maharashtra Police has started its investigations into the matter.
form that RBI vides their letter dated
October 09, 2019, informed that the “Further, forensic auditors have been appointed by the administrator of the bank
application for voluntary amalgam- to look into the related transactions. The administrator and the three-member
ation of lndiabulls Housing Finance advisory committee appointed by the RBI in terms of Section 36AAA(5)(a) read
Ltd and lndiabulls Commercial Credit with Section 56 of the Banking Regulation Act, 1949 are working for speedier
Ltd with Lakshmi Vilas Bank Ltd can- resolution of the various issues being faced by the bank in conducting its opera-
not be approved." tions," it said.
The RBI added it is closely monitoring the developments and shall continue to
Lakshmi Vilas Bank Ltd in April had
informed exchanges that its board take necessary steps in the interest of the depositors of the bank.
has approved a merger with mort-
gage financier Indiabulls Housing Fi- RBI levies Rs75 lakh on Syndicate Bank, Rs1 cr on
nance Ltd in an all stock deal. Lakshmi Vilas Bank for violating norms
Both Indiabulls and Lakshmi Vilas A monetary penalty of Rs1 crore has been levied on Lakshmi Vilas Bank By RBI
Bank Ltd. were seeking to increase in the pretext of violation of asset classification and fraud
profitability and bolster capital as the detection norms. The central bank has also fined Rs 75
crisis in the shadow banking sector lakh on Syndicate Bank on the same grounds.
drags on. The bank had sought ap-
proval from the Reserve Bank of In- "The Reserve Bank of India (RBI) has, by an order dated
dia (RBI) on 7 May, 2019. October 14, 2019, imposed monetary penalty of Rs 1 crore on Lakshmi Vilas
Bank Ltd for non-compliance with certain provisions of directions issued by RBI
Indiabulls is presently looking to di- on 'Income Recognition and Asset Classification (IRAC) norms," RBI said in a
versify its asset base while Lakshmi release.
Vilas Bank needs to raise capital to
come out of the lending curbs. In a another release, it said a monetary penalty of Rs75 lakh has been imposed
Indiabulls’ dollar bonds and shares on Syndicate Bank for non-compliance with the directions issued by RBI on frauds
plunged after the Delhi High Court classification and reporting; innovative housing loan products wherein upfront
admitted a petition against the disbursal of loans is done.
shadow lender and the Reserve Bank This action is based on the deficiencies in regulatory compliance and is not in-
of India placed restrictions on the tended to pronounce upon the validity of any transaction or agreement entered
Lakshmi Vilas Bank. into by the bank with its customers, RBI said for the banks.

8 | 2019 | NOVEMBER | BANKING FINANCE