Singapore’s DBS completes LVB takeover, big boost to India operations (Banking Industry)

DBS Group will now pump in Rs 2,500 crore into its India unit for the expansion. Before taking over LVB, DBS Bank India only had 30 branches in the country. Now, it has over 550 branches and 900-plus ATMs. It is a major step forward for DBS Bank India, which will now take over all the branches of LVB — a move that will help it to expand its footprint in India. Earlier, DBS Bank India mostly had a digital presence in the country with roughly 30 branches. Singapore-based DBS Group said its India unit, DBS Bank India, has completed the takeover of cash-strapped Lakshmi Vilas Bank (LVB). The takeover was completed last week after the government approved Reserve Bank of India's (RBI) proposal to merge the ailing LVB with DBS Bank India. It is a major step forward for DBS Bank India, which will now take over all the branches of LVB — a move that will help it to expand its footprint in India. Earlier, DBS Bank India mostly had a digital presence in the country. It was reported last week that all LVB branches will now operate as branches of DBS Bank India.

The move brought immense relief to depositors of LVB, who were worried after the RBI had put the disused bank under a moratorium. However, after a quick merger process, the moratorium on LVB has been lifted and depositors can now withdraw their money without any restriction. The 94-year-old Chennai-based LVB was folded in DBS Bank India after the RBI put a restriction on it due to serious deterioration in financial position. The bank’s financial position was worsening for the past three years and it was placed under the PCA framework in 2019.

The bank had also failed to raise adequate capital for its rescue. This is what forced the central bank to step in. The rebranding of LVB branches has begun and ATM screens have also been reconfigured to reflect DBS’s logo. The source also said that the entire process will be complete in a week. DBS has also confirmed that it will continue to employ some 4,000 LVB staff. While depositors of LVB can breathe a sigh of relief, the same cannot be said for bondholders of LVB. The lender was earlier asked by the central bank to complete write down Basel II-compliant tier 2 bonds worth Rs 320 crore. Anil Gupta, an analyst at credit rating agency ICRA, stated that RBI has precedence with the proposed write off as it is the first time a Tier II bond is being written off. This move will be very beneficial for the Indian economic growth rate & will also provide employment to maximum people.