Lakshmi Vilas Bank which is now a loss-making and capital-starved Bank in the banking sector on Sunday said that they are evaluating the proposed merging of the Clix Group with it adding the mutual due diligence is substantially complete. The bank is in the middle of a crisis after the shareholders blocked the re-appointment of seven directors to the board including that of S. Sundar(MD & CEO).
The shareholders also voted against the re-appointment of statutory auditors P Chandrasekar LLP, branch auditors, and chartered accountants. The AGM detected shareholders approving a resolution authorizing the bank to raise capital via an FPO, QIP, rights issue, or any other route and also increase the lender’s share capital from Rs 650crore to Rs 1,000crore. The bank would continue to keep its concentration on capital-light loans like gold loans to optimize profitability without straining capital funds according to a release signed by independent director Shakti Sinha.
Lakshmi Vilas Bank (LVB) has been placed under RBI’s prompt corrective action since 2019. They had reduced their loss to Rs 112.28crore for Q1FY21 from a net loss of Rs 237.25 crore in Q1FY20. The lender’s total income declined to Rs 538.83 by 20.4%. Pointing out a further deterioration in asset quality, gross NPA rose to 25.40% in the reporting quarter, from 17.30% in the corresponding quarter of the last fiscal. The net NPA increased from 8.30% to 9.64% and the provision coverage ratio stood at 72.58%.
The Annual Report 2020 stated that LVB had a capital adequacy ratio of just 1.12% as on March 31, which is way below than the RBI requirement of 8%. Tier I and II of the lender’s components of CAR stood at a negative 0.88% and 2%. With liquidity coverage ratio (LCR) over 250% against the minimum 100% required, the bank is successful in claiming its liquidity position as of September 27.
Along with Sundar, the other directors whose appointments or re-appointments were rejected by shareholders were Gorinka Jaganmohan Rao, BK Manjunath, N Saiprasad, YN Lakshminarayana Murthy, KR Pradeep, and Raghuraj Gujjja. The Reserve Bank of India (RBI) last year had rejected a deal where LVB had attempted to merge with Indiabulls Housing Finance.
