The Centre has placed capital-starved Lakshmi Vilas Bank under a one-month moratorium with effect from 6 PM on Tuesday.
“In exercise of the powers conferred by sub-section (2) of section 45 of the Banking Regulation Act, 1949, the Central Government, after considering an application made by the RBI under sub-section (1), hereby makes this Order of moratorium in respect of the Lakshmi Vilas Bank Limited, Karur, Tamil Nadu for the period with effect from 18:00 hrs on the November 17,2020 up to and inclusive of 16th day of December, 2020,” an order from the Ministry of Finance said.
The Karur-based small bank is already under the Reserve Bank of India (RBI’s) prompt corrective action (PCA) framework since September 2019 on account of high net non-performing assets (NPAs), insufficient capital, negative return on assets (RoA) for two consecutive years and high leverage.
The moratorium imposes a withdrawal limit of Rs. 25,000 on depositors.
“During the moratorium, the Lakshmi Vilas Bank shall not, without the permission in writing of the RBI make, in the aggregate, payment to a depositor of a sum exceeding twenty-five thousand lying to his credit, in any savings, current or any other deposit account,” the order said.