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LVB-DBS deal: Post equity capital, RBI directs LVB to write off tier-2 bonds as well

As part of the scheme of amalgamation of Lakshmi Vilas Bank with DBS Bank India, the Reserve Bank of India ( RBI) has directec the lender to also write off tier-2 bonds worth around Rs 320 crore

November 27, 2020 / 04:40 PM IST

After writing off the entire equity share capital of  Lakshmi Vilas Bank (LVB) as part of the scheme of amalgamation with DBS Bank India, the Reserve Bank of India ( RBI) has directed the bank to also write off tier-2 bonds worth around Rs 320 crore.

“The Reserve Bank of India, vide their letter dated 26th November 2020 has advised the need to fully write-down the Series VIII, Series IX and Series X Basel-III complaint Tier-2 Bonds before the amalgamation comes into effect from the Appointed date i.e., 27th November 2020,” read an exchange filing.

Moneycontrol had earlier in the day reported that the RBI is likely to make such a move.
The letter from the RBI to LVB said: "Given that Section 45 of the Banking Regulation Act, 1949 has been invoked and the scheme has been notified, the bank is deemed to be non viable or approaching non-viability and accordingly, the triggers for a write-down of Basel 111 tier 2 bonds issued by the bank has been triggered. In light of the above provisions, such Basel 111 Tier 2 bonds would need to be fully written down before the amalgamation of the bank comes into effect."
Ashwin Mohan
first published: Nov 26, 2020 08:19 pm

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