Lakshmi Vilas Bank sanctions raising up to ₹500 crore

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The board of cash-strapped Lakshmi Vilas Bank(LVB) sanctions raising of up to ₹500 crores through the issuance of shares based on the rights to existing shareholders. Lakshmi Vilas Bank’s shares were trading 0.3% lower at ₹18.25 on the Bombay Stock Exchange(BSE).

The lender mentioned in communication to exchanges that the board considered and approved, inter-alia, subject to the necessary approvals, the raising of funds by issuance and allotment of equity shares or such eligible securities of the bank, for an aggregate amount of up to ₹500 crores by means of a rights issue, on such terms, following necessary law, including Companies Act, 2013 and the rules made hereafter and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) regulations, 2018 each as altered. As per the decision taken by the board and shareholders in August and September accordingly, the bank has got approval for raising funds by way of equity shares and other instruments on various modes, which includes further public offer, rights issue, or qualified institutions placement for an aggregate amount of up to ₹1000 crore.

The lender also informed that the lender has received a non-binding offer from Aion-backed non-banking finance company Clix group for a merger. If the merger takes place with the Clix group, the net worth of the bank will rise from the current ₹1,200 crores i.e. double of ₹ 3,100 crores. Clix Capital has a net worth of ₹1,900 crores that becomes the net worth after the deal.

 The old generation Chennai-based private sector was commenced on September 25 when the shareholders voted out 7 directors on its board, which includes CEO S Sundar and promoter’s K R Pradeep and N Saiprasad. Subsequently, the Reserve Bank of India (RBI) scheduled a three-member team to run the bank by being Meeta Makhan as chairperson, Shakti Sinha, and Satish Kumar Kaira as members. The lender has been resolved by high bad loans and the attendant regulatory checking since 2019. The bank posted a net loss of ₹112. 28 crores in the June 2020 quarter. Almost a fourth of its advances is dud assets now, with gross non-performing assets of ₹ 25.40 % as of the end of June, against 17.30 % a year ago.

Before this LVB, tried to join with Srei Capital and with Indiabulls Housing Finance NSE -2.45 %, but the RBI objected to the merger proposals on certain grounds.

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