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Indiabulls too moves court challenging LVB-DBS merger

According to the final scheme of amalgamation, the entire equity paid-up capital of LVB shareholders will be written off and the shares will cease to trade and get de-listed from the exchanges with effect from November 27.

November 26, 2020 / 07:18 PM IST

Indiabulls Housing Finance Ltd, one of the major shareholders of the Lakshmi Vilas Bank (LVB), too has moved the Bombay High Court seeking legal intervention in the merger of the bank with Singapore-based DBS. The petition urges the court to protect the interest of the equity holders.

According to the final scheme of amalgamation, the entire equity paid-up capital of LVB shareholders will be written off and the shares will cease to trade and get de-listed from the exchanges with effect from November 27.

Indiabulls has close to 5 percent stake in the bank. Besides Indiabulls,  a clutch of other shareholders including one of the founders, KR Pradeep, too has moved courts. Pradeep has filed his petition in the Bombay HC.

The Bombay HC is learnt to have admitted the petitions and will likely issue an interim order on the matter soon, according to persons familiar with the development. None of them wanted to be named as the matter is in court. Other investors who have moved court include Kare Electronics & Development Private Ltd and Pranava Electronics Private Ltd.

Other major shareholders in the LVB include Prolific Finvest Private Ltd (3.36 percent), Srei Infrastructure Finance (3.34 percent), MN Dastur and Co Pvt Ltd (1.89 percent), Capri Global Holdings Pvt Ltd (1.82 percent), Capri Global Advisory Services (2 percent), Boyance Infrastructure Pvt Ltd (1.36 percent) and Trinity Alternative Investment Managers (1.61 percent).

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Earlier, the RBI had said that all the branches of  LVB will function as branches of DBS Bank India with effect from November 27. This is after Cabinet cleared scheme for the amalgamation of the LVB with DBS Bank India.

Customers, including depositors of LVB, will be able to operate their accounts as customers of DBS Bank India with effect from November 27, 2020, the RBI said.

Consequently, the moratorium on the Lakshmi Vilas Bank will cease to be operative from that date. DBS Bank India is making necessary arrangements to ensure that service, as usual, is provided to the customers of the LVB, the RBI said.

The government put the bank under a one-month moratorium while the RBI announced an amalgamation scheme with DBS last week after the financial situation of the ban worsened.

In the second quarter, LVB’s gross non-performing assets (GNPAs) stood at 24.45 percent, while net NPAs stood at 7.01 percent. The bank’s Tier 1 Capital ratio has turned negative; the overall Capital Adequacy Ratio (CAR), as per Basel Ill guidelines, was at a negative 2.85 percent as of September 30.

The bank’s business has shrunk over the year. Total business stood at Rs 37,595 crore at the end of September 2020, as against Rs 47,115 crore at the end of September 2019.

The net loss after tax amounted to Rs 396.99 crore for the quarter ended September 30, as against a net loss of Rs 357.18 crore in the year-ago quarter.
Dinesh Unnikrishnan
first published: Nov 26, 2020 07:18 pm

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