The Ministry of Finance on Tuesday placed Lakshmi Vilas bank under moratorium and also restrained the withdrawal limit from its customer’s account at Rs. 25,000/ month till December 16. The order came in after the Reserve Bank of India advised the government to place a moratorium, viewing it’s deteriorating financial health.
However, the Ministry of Finance has permitted the depositors to withdraw more than ₹ 25,000 with permission from the Reserve Bank of India for purposes such as medical treatment, payment of higher education and marriage expenses.
On the same, RBI said in a statement that the bank didn’t have a credible revival plan and there was no alternative but to apply to the central government for imposing a moratorium under Section 45 of the Banking Regulation Act, 1949, to protect the interest of its depositors and to ensure financial and banking stability.
Lakshmi Vilas Bank is a Tamil Nadu-based private sector lender and its shares ended 1 per cent lower at ₹ 15.50 apiece on the BSE earlier today.
Lakshmi Vilas Bank asset quality has been worsening over the past year.