Centre places Lakshmi Vilas Bank under a moratorium, caps withdrawal limit to 25,000 till Dec 16

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.

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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.

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