India approves merger of Lakshmi Vilas Bank to Singapore's DBS

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MUMBAI (Reuters) - The Indian government has approved the merger of crisis-hit Lakshmi Vilas Bank into the Indian unit of Southeast Asia’s largest lender DBS.

LVB was placed under a moratorium earlier this month after a serious deterioration in its financial health. The moratorium will be lifted from Nov. 27 once the amalgamation comes into effect after which all its branches will function as part of DBS.

“Customers, including depositors of the Lakshmi Vilas Bank Ltd will be able to operate their accounts as customers of DBS Bank India Ltd with effect from November 27, 2020,” the central bank said in a notification on Wednesday.

LVB has a network of more than 550 branches and in excess of 900 ATMs across India, where DBS has a limited presence with only around 30 branches.

LVB had failed to submit any concrete proposal for capital raising and therefore the central bank stepped in and appointed an administrator and superseded the bank’s board..

Trading in equity shares of LVB will be suspended from Nov. 26, a regulatory filing said.

With this merger the 94-year old Chennai-based lender will cease to exist while giving a boost to DBS’s expansion ambitions in India.

Reporting by Nupur Anand; Editing by Barbara Lewis