The central government put it on Tuesday
The EU Ministry of Finance took the measure on the basis of a request from the RBI in view of the declining financial health of private sector lenders based in Tamil Nadu. In a statement, the RBI said that when there was no credible recovery plan to protect the interest on deposits and for the sake of financial and banking stability, there was no alternative to imposing a moratorium on the central government under the article. 45 of the Banking Regulation Act of 1949.
TN Manoharan, a former non-executive chairman of Canara Bank, has been appointed bank administrator.
The RBI has released a draft of the scheme to merge with the LVB
Since the moratorium was put in place within the framework of the RBI’s management action (PCA) 14 months ago, there has been a sharp rise in non-performing assets, insufficient capital to manage risks and negative asset returns for two consecutive years. The PCA aims to improve the performance of weak banks without affecting their day-to-day operations. The bank insisted that in due course it would comply with RBI directives and update them on a monthly basis. He claimed in September last year that the PCA would not cause harm to its normal operations.
In September this year, shareholders elected seven board members, including CEO and CEO S Sundar, at the annual general meeting. The RBI then appointed a three-member board of directors consisting of independent directors Meeta Makhan, Shakti Sinha and Satish Kumar Kalra.
An official at the bank’s Mumbai office said the official response would be available on Wednesday. LVB has about a dozen branches in the Mumbai Metropolitan Region, which includes two branches in Thane and Navi Mumbai. Founded in 1926 by a group of Tamil Nadu businessmen, the bank has expanded to 566 branches and 918 ATMs in 19 states and one EU territory.
On March 5 this year, the RBI imposed a moratorium on another private lender, the capital-hungry Yes Bank, and limited withdrawals to 50,000 euros per account. The next day, Finance Minister Nirmala Sitharaman set out a restructuring plan to save the bank from taking a 49% stake in the SBI. The moratorium was lifted on March 18, and the next day regular banking activities were resumed.