A day before the final scheme of amalgamation between Lakshmi Vilas Bank and DBS Bank India becomes effective, a group of promoter group entities of the ailing south based lender has initiated legal action against the Reserve Bank of India, the Union of India & DBS Bank, sources with knowledge of the matter told Moneycontrol. The promoter group holds 6.80 per cent stake in Lakshmi Vilas Bank. All the branches of the Lakshmi Vilas Bank Ltd. will function as branches of DBS Bank India Ltd. with effect from November 27th, 2020.
“A writ petition has been filed at the Bombay High Court by Kare Electronics & Development Private Ltd, Pranava Electronics Private Ltd and KR Pradeep,” said one of the individuals cited above.
“They have challenged the final scheme of amalgamation approved by the government in consultation with the regulator. The case may come up for hearing today,” said a second person.
According to the final scheme of amalgamation of Lakshmi Vilas Bank with DBS Bank India, the entire amount of the paid-up share capital will be written off resulting in shareholders losing their entire investment.
“On and from the appointed date, the entire amount of the paid-up share capital and reserves and surplus, including the balances in the share/securities premium account of the transferor bank, shall stand written off,” the scheme states.
Moneycontrol could not immediately connect with the promoter group entities for an official comment. Moneycontrol had earlier reported that institutional shareholders of LVB who are set to lose their entire investment are weighing legal action.
Institutional equity investors in LVB include Indiabulls Housing Finance Ltd, which had a 4.99 per cent stake in the bank as of September 2020, Prolific Finvest Private Ltd (3.36 per cent), Srei Infrastructure Finance (3.34 per cent), MN Dastur and Co Pvt Ltd (1.89 percent), Capri Global Holdings Pvt Ltd (1.82 per cent), Capri Global Advisory Services (2 per cent), Boyance Infrastructure Pvt Ltd (1.36 per cent) and Trinity Alternative Investment Managers (1.61 per cent).
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