Lakshmi Vilas Bank
| Company type | Private sector bank |
|---|---|
| Industry | Banking, Financial services |
| Founded | 1926 in Karur, Tamil Nadu, India |
| Founder | V. S. N. Ramalinga Chettiar and group of seven entrepreneurs |
| Defunct | 27 November 2020 |
| Fate | Merged into DBS Bank India Limited |
| Headquarters | Karur , India |
Area served | India (19 states and one union territory) |
| Products | Banking, Financial services |
Lakshmi Vilas Bank was a private sector banking institution in India, founded in 1926 in Karur, Tamil Nadu. By November 2020, it operated through 566 branches spread over 19 states and one union territory. On 27 November 2020, it was merged into the Indian arm of DBS Bank.
History
Established in 1926 by a group of seven entrepreneurs from Karur, headed by V. S. N. Ramalinga Chettiar, Lakshmi Vilas Bank was created to cater to the financial requirements of local traders, industrialists, and farmers. The bank was officially incorporated on 3 November 1926 and obtained its banking license from the Reserve Bank of India on 19 June 1958. It achieved scheduled commercial bank status on 11 August 1958, allowing it to conduct full-scale commercial banking operations.
From 1961 to 1965, the bank grew substantially through the acquisition of nine other banks. Starting in 1974, its footprint expanded beyond Tamil Nadu into regions including Andhra Pradesh, Karnataka, Kerala, Mumbai, New Delhi, Kolkata, Maharashtra, Gujarat, and Madhya Pradesh. In 1976, Lakshmi Vilas Bank gained authorization to deal in foreign exchange to support clients engaged in international trade. The bank initiated mechanization processes in 1977 and began computerization efforts with an internal team in 1993. Implementation of a Core Banking Solution (CBS) commenced in October 2006 and was completed by March 2008.
On 5 April 2019, the board approved a merger proposal with Indiabulls Housing Finance Ltd., under which Indiabulls shareholders would own approximately 90.5% and Lakshmi Vilas Bank shareholders about 9.5% of the merged entity named Indiabulls Lakshmi Vilas Bank. The merger intended to establish a net worth of ₹19,472 crore and a loan portfolio of ₹1,23,393 crore for the nine months ending FY1920. However, this plan was later shelved after the Reserve Bank of India withheld its consent.
Moratorium
Due to substantial financial deterioration, the Reserve Bank of India imposed a month-long moratorium on Lakshmi Vilas Bank starting on 17 November 2020. The RBI noted that the bank’s financial condition was inadequate to fulfill depositor demands, resulting in restrictions on withdrawals during this period. Over three consecutive years, the bank suffered losses that depleted its net worth amidst shrinking advances and escalating non-performing assets (NPAs), without any feasible strategic measures to address these challenges.
Concurrently, the RBI announced a plan for LVB’s amalgamation with DBS Bank India Limited, which involved writing off the paid-up share capital and removing LVB from stock exchange listings. The moratorium concluded on 27 November 2020, after which all former LVB branches began operating as branches of DBS Bank India. Furthermore, the RBI mandated a write-down of roughly in Tier-II bonds held by LVB, setting a significant precedent affecting other banks.