Crisis of Laxmi Vilas bank.
                     CRISIS OF LAXMI VILAS 
BANK (LVB)
INTRODUCTION
 Lakshmi Vilas Bank (LVB) has recently been in the 
headlines due to their bad loans fiasco, management 
reshuffling and the consequent controversies with the 
Reserve Bank of India (RBI). 
 All eyes are now set on the uncertainties around the 
future of the bank and the systematic implications for 
the banking sector.
Source: The Economic Times
WHAT IS IT HAPPENING 
CURRENTLY?
 In the 93rd Annual General Meeting of the bank held on 
25th Sept, shareholders voted against the seven out of 
a total of 11 members from the senior management 
including the interim MD&CEO, S, Sundar. 
 According to reports the shareholders were unhappy 
with the rise in bad loans, value erosion and the future 
of the bank. 
Source: The Economic Times
WHAT RBI DID?
 The RBI then, appointed three members, Meeta 
Makhan, Shakti Sinha and Satish Kumar Kalra to look 
after the daily affairs of the bank along with the 
remaining four senior officials of the bank. 
 According to banking experts, RBI will soon appoint an 
administrator.
Source: ORF
WHEN DID THE TROUBLE BEGIN?
 Trouble for LVB started after it shifted its focus from 
SMEs to large businesses, in 2016-17. 
 It loaned Rs 720 crore to Malvinder Singh and Shivinder 
Singh, former promoters of pharma major Ranbaxy and 
Fortis Healthcare, against fixed deposits of Rs 794 
crore. 
 That turned out to be a bad loan.
Source: TBS Research 
Centre
RELIGARE FINVEST
 In 2018, Religare Finvest, an arm of Religare Enterprises 
Limited, sued a Delhi branch of LVB to recover fixed 
deposits worth about Rs 800 crore that the bank 
invoked to recover loans to the Singh brothers. 
Source: The Economic 
Times
PROMPT CORRECTIVE ACTION 
 After the case was filed, RBI put LVB under prompt 
corrective action (PCA) in September 2019 due to which 
the bank was not able to issue fresh loans or open a 
new branch anywhere. 
 The PCA has not been revoked till date. Currently, the 
case is sub judice and two employees of the bank has 
been arrested.
Source: iPleader 
Blog
LVB AND INDIA BULLS HOUSING 
FINANCE MERGER FAILED
 The capital Starved, Lakshmi Vilas Bank was looking for 
potential mergers and began talks with India Bulls 
Housing Finance, a NBFC company. 
 The central bank, refused the proposed merger 
between India Bulls Housing Finance and LVB. 
Source: The Economic Times
LVB AND CLIX CAPITAL MERGER
 After the deal with IndiaBulls Housing Finance was left 
unfulfilled, LVB announced that the bank is in merger 
talks with Clix Capital.
 Shareholders of the LVB has approved the merger with 
Clix Capital. But a certain regulatory approvals are 
pending in this case.
Source: ANI News
FINANCIAL OF LVB
 Out of 21 listed banks in the country, LVB stands second 
last with the market cap of Rs 680 crore. 
 The major problem with the bank's financial is the bad 
loans. 
 The Gross NPA of the bank has increased to a quarter 
this FY.
 Gross NPA of the Bank was 10% in 2018 which 
increased to 15.3% in 2019 and 25.4% in 2020.
Source: Business 
Standard
LVB SHARE PRICE FROM RS 185 
TO RS 10
 Lakshmi Vilas Bank (LVB) was founded in 1926 by a 
group of seven businessmen in Karur under the 
leadership of VSN Ramalinga Chettiar.
 In the last five years, the banks share prices were rose 
to Rs 185 in 2017 and slipped to even Rs 10 in March 
2020.
Source: Business 
Today