Lakshmi Vilas Bank and DBS India amalgamation approved – UPSC CURRENT
Lakshmi Vilas Bank and DBS India amalgamation approved by Cabinet
Why in News?
- The Reserve Bank of India (RBI) proposed a draft scheme of amalgamation that entails the Indian unit of Singapore’s DBS Bank taking over the capital-starved bank.
- Lakshmi Vilas Bank was placed under the prompt corrective action (PCA) framework in September 2019 considering the breach of PCA thresholds as on 31st March, 2019.
- The RBI has specified certain regulatory trigger points, as a part of prompt corrective action (PCA) Framework, in terms of three parameters, i.e. capital to risk weighted assets ratio (CRAR), net non-performing assets (NPA) and Return on Assets (RoA), for initiation of certain structured and discretionary actions in respect of banks hitting such trigger points.
- After taking into consideration various developments, the RBI had come to the conclusion that in the absence of a credible revival plan, with a view to protect depositors’ interest and in the interest of financial and banking stability, there is no alternative but to apply to the Central Government for imposing a moratorium under section 45 of the Banking Regulation Act, 1949.
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