The unprecedented move by shareholders of Lakshmi Vilas Bank (LVB) to oust an RBI-approved CEO and directors is likely to result in the banking regulator stepping in to hasten the deal with Clix Capital or to find other bidders for the bank.
On Sunday, the Reserve Bank of India (RBI) approved constitution of a committee of three independent directors – Meeta Makhan, Shakti Sinha and Satish Kumar Kalra to manage day-to- day affairs of the bank.
A recent amendment to the Banking Regulation Act gives the RBI sweeping powers to push a merger. AION-backed Clix Capital, which is founded by Pramod Bhasin former head of GE Capital in India had initiated due diligence of the bank ahead of a merger.
LVB had initiated merger talks with Clix after RBI rejected an earlier proposal to merge with Indiabulls Housing Finance. The bank urgently needs an investor as it is facing lending restrictions for over a year from RBI under its prompt corrective action after executives came under probe for fraud in respect of fixed deposits of Religare Finvest.
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