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Bombay High Court refuses to grant stay over DBS bank- Laxmi Vilas Bank amalgamation scheme
Bombay High Court refused to grant ad-interim relief in a petition asking for a stay over the DBS-Laxmi Bank amalgamation scheme. Since the scheme was to be implemented on date 27th November 2020, the High Court took up the case with the paucity of time and didn’t attach the reasons for the refusal in the interim order. However, the court ordered to add the DBS bank as the respondent in the original Writ Petition (L) No. 6943 of 2020.
The Reserve Bank of India (RBI) announced the amalgamation of Laxmi Vilas Bank with the DBS bank which is the first of the kind of amalgamation with a foreign bank. The date of amalgamation was announced by RBI to be effective from November 27, 2020, and was approved by the cabinet on Wednesday. The merger was announced following the takeover of the board of the Laxmi Vilas Bank by RBI because of the bad loans, capital ratios and inadequate governance techniques and announced a moratorium with monthly withdrawal limits capped at Rs. 25000. DBS India will infuse the capital of around 2500 Crores into LVB and also take over the working of the bank.
Following the announcement, several petitions came up from the inventors and major shareholders, which includes Indiabulls Housing Finance Ltd, Kare Electronics & Development Private Ltd, Prolific Finvest Private Ltd, Srei Infrastructure Finance etc. because such an infusion would wipe a huge chunk of their capital and could result in losses caused by a forced amalgamation by RBI. The court also listened to the petitions filed by these along with numerous other petitions and refused to order any full or part stay on the scheme. However, the monetary part is scheduled to be heard and decided on December 14th, 2020.
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