Mumbai: The Centre has imposed a 30-day moratorium on Lakshmi Vilas Bank effective from Tuesday. A withdrawal limit of ₹25,000 with certain exceptions for unforeseen expenses has been imposed for depositors.
The Reserve Bank of India said in a statement, the central government puts Laxmi Vilas Bank Limited under a 30-day moratorium, a capital withdrawal limit of Rs 25,000 from the bank till December 16.
The move by the Reserve Bank of India has led to a “steady decline” in the financial position of Lakshmi Vilas Bank over the last three years. The moratorium from RBI comes with immediate effect.
Noting that Laxmi Vilas Bank is lowering its net worth, RBI said it has kept the bank in the absence of any viable strategic plan, for declining advances and reduction in non-performing assets (NPAs).
Issuing a statement, the RBI said that the bank had failed to raise sufficient capital to address issues surrounding its net worth and was also looking at continuity of deposits and low levels of liquidity.
Prior to this, the bank in September 2019 was also placed under the Prompt Corrective Action (PCA) framework over breach of PCA thresholds as of March 31, 2019.