Chennai based Lakshmi Vilas Bank placed under moratorium; withdrawal limit Rs 25,000

Cash stapped Lakshmi Vilas Bank (LVB) has been placed under moratorium till December 16. The central government took the decision after receiving an application from the Reserve Bank of India (RBI).

Chennai based LVB will not be allowed to make payments exceeding Rs 25,000 without prior approval from the RBI, say media reports.

The Reserve Bank of India, in consultation with the Central government, has superseded the board of directors of LVB for a period of 30 days owing to a serious deterioration in the financial position of the bank. TN Manoharan, former non-executive chairman of Canara Bank has been appointed as the administrator.

A customer of the bank, in Madurai, says, "We were shocked. Withdrawal of Rs 25000 is inadequate during this time when people are in need of money."

Finance Ministry order
In exercise of the powers conferred by sub-section (2) of section 45 of the Banking Regulation Act, 1949 (10 of 1949), the Central Government, after considering an application made by the Reserve Bank of India under the sub-section (1) of that section, hereby makes this Order of moratorium in respect of the Lakshmi Vilas Bank Limited, Karur, Tamil Nadu for the period with effect from 18:00 hrs on the 17th day of November 2020 up to and inclusive of 16th day of December 2020 and hereby stays the commencement or continuance of all actions and proceedings against that banking company during the period of moratorium, subject to the condition that such stay shall not in any manner prejudice the exercise by the Central Government of its powers under clause (b) of sub-section (4) of section 35 of the said Act or the exercise by the Reserve Bank of India of its powers under section 38 of the said Act.