Not only this, the central bank has also imposed a fine of Rs 1 crore in violation of the rules. Like Yes Bank, now the RBI has increased the strictness on the private sector's Laxmi Vilas Bank. Looking at the developments of the last few days, it seems that everything is not going well in Lakshmi Vilas Bank ..
1 Crore Fine
In the latest case, the Reserve Bank has imposed a penalty of Rs 1 crore on Lakshmi Vilas Bank. According to information provided by RBI, this penalty has been imposed on Lakshmi Vilas Bank in the case related to Income Recognition and Asset Classification (IRAC). It is alleged that this bank violated RBI rules in the case.
Refusal to approve merger
Recently, RBI rejected Indiabulls Housing Finance's proposal to merge with Lakshmi Vilas Bank. This information was given by Lakshmi Vilas Bank itself. According to this, the RBI through its letter on 9 October 2019 informed that Indiabulls Housing Finance Limited. And Indiabulls Commercial Credit Ltd. Merger application with K Laxmi Development Bank (LVB) cannot be approved. Here, let us know that on May 7, 2019, Lakshmi Vilas Bank sought approval from the Reserve Bank regarding the proposed merger.
Inserted into PCA framework
The Reserve Bank of India put Laxmi Vilas Bank into the Prompt Corrective Action (PCA) framework in September. This action was taken by the RBI in view of the huge amount of debt, lack of adequate capital for risk management and negative returns on assets for two years. The inclusion in the PCA framework meant that Lakshmi Vilas Bank could neither offer new loans nor open new branches. RBI has taken this action on the charge of Religare Finvest Limited (RFL). According to the allegation, the bank has rigged RFL's FD of Rs 790 crore.
Fall in share price
In these circumstances, the stock price of Lakshmi Vilas Bank is continuously falling. In just 6 months, the share price of the bank has fallen from Rs 98 to Rs 22. This means that the share price has fallen by more than 75 rupees. At present, the market cap of the bank is just 742.45 crores.
Loss in income increases
If we talk about Lakshmi Vilas's income and net profit or loss, both of them have steadily declined. As of 31 March 2019, the net loss of the bank has increased to Rs 894 crore. Earlier, the bank had a net loss of Rs 585 crore as on 31 March 2018. At the same time, the total income of the bank has also decreased. Till 31 March 2018, the total income was Rs 3 thousand 388 crore, which has come down to 3 thousand 90 crore.
let us tell you that in the year 1926, Lakshmi Vilas Bank came into existence but it got a license from RBI in 1958. At the same time, the expansion of the bank's branch started from 1974. At present, Lakshmi Vilas Bank's branch and financial center are present in three metros – Delhi, Mumbai and Kolkata, besides Andhra Pradesh, Karnataka, Kerala.
Presently Lakshmi Vilas Bank's plight looks like Yes Bank. Let us tell you that Yes Bank, which started about 15 years ago, is going through a period of crisis today. Yes Bank investors have lost more than 90 percent in just one year. At the same time, the stock is also trading at a level of 40 rupees from Rs 400. The market cap of the bank has also fallen by more than 70 thousand crores.
