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Lakshmi Vilas Bank shares hit lower circuit
Business

Lakshmi Vilas Bank shares hit lower circuit

Agency News

Shares of Lakshmi Vilas Bank tumbled 5 per cent last week after an FIR was registered against directors of the company over allegations of various offences including cheating.

The scrip dropped 4.94 per cent to Rs 36.55 -- its lowest trading permissible limit for the day -- on the BSE. On the NSE, it fell 4.94 per cent to Rs 36.50 -- its lower price band.

The Reserve Bank of India (RBI) has initiated Prompt Corrective Action (PCA) against Lakshmi Vilas Bank (LVB), the Chennai-based lender on Saturday.

RBI decided to put LVB in the PCA framework on account of a high level of bad loans, the lack of sufficient capital to manage risks, a negative return on assets for two consecutive years, and high leverage.

The unprecedented RBI move came in the wake of the Delhi Police’s Economic Offences Wing decision to register a complaint against the board of LVB. Economic Offensive Wing alleged cheating and misappropriation of funds.

The action came after an on-site inspection was carried out for the year ended March 31, 2019. The regulator has advised the bank on restrictions put in place and corrective steps it needs to take. The bank said PCA would not have any adverse impact on its day-today operations, including the acceptance and repayment of deposits.