Ziraat Times Team Report
Srinagar: As the central government has approved the merger of crisis-hit Lakshmi Vilas Bank into the Indian unit of Southeast Asia’s largest lender DBS after its financial crisis, Jammu & Kashmir remains unaffected by its crisis.
Financial experts who Ziraat Times spoke to said that Lakshmi Vilas has had no presence in Jammu & Kashmir, as such general masses and the larger financial system remain unscathed from the ongoing crisis.
“J&K’s banks and financial institutions, including J&K Bank, didn’t have any considerable business engagement or risk exposure to Lakshmi Vilas Bank, as such the this erstwhile state’s financial system remains almost immune from the bank’s current crisis”, Sheikh Samir, a Dubai-based finance professional told Ziraat Times.
Although residents of Jammu & Kashmir, both individuals and firms. living in parts of South India have been doing some business with the bank in states like Karnataka, Tamil Nadu, Andhra Pradesh and Telamgana, the percentage of that business compared with the overall business has been very low.
“J&K people living in South India did not do much business with Lakshmi Vilas Bank, as such there is not much impact by the bank’s financial crisis and the latest merger”, Faizan Khan, a financial analyst with a leading bank in Karnataka told Ziraat Times.
Pertinemtly, LVB was placed under a moratorium earlier this month after a serious deterioration in its financial health. The moratorium will be lifted from Nov. 27 once the amalgamation comes into effect after which all its branches will function as part of DBS.
“Customers, including depositors of the Lakshmi Vilas Bank Ltd will be able to operate their accounts as customers of DBS Bank India Ltd with effect from November 27, 2020,” the central bank said in a notification on Wednesday.
LVB has a network of more than 550 branches and in excess of 900 ATMs across India, where DBS has a limited presence with only around 30 branches.
LVB had failed to submit any concrete proposal for capital raising and therefore the central bank stepped in and appointed an administrator and superseded the bank’s board..
Trading in equity shares of LVB will be suspended from Nov. 26, a regulatory filing said.
With this merger the 94-year old Chennai-based lender will cease to exist while giving a boost to DBS’s expansion ambitions in India.
With inputs from Reuters