RBI rejects India Bulls-Lakshmi Vilas Bank amalgamation
The Reserve Bank of India on Wednesday rejected the merger of Lakshmi Vilas Bank and India Bulls Housing Finance Ltd, months after the bank had sought its approval on May 7.
 
"The RBI vide their letter dated October 9, 2019, informed that the application for voluntary amalgamation of Indiabulls Housing Finance Ltd and Indiabulls Commercial Credit Ltd with the Lakshmi Vilas Bank (LVB) cannot be approved," Lakshmi Vilas Bank said in a statement.
 
The crucial merger was for Indianbulls was to diversify its asset while for Lakshmi Vilas Bank, running in loss for five successive quarters, it was to raise capital to come out of the lending curbs.
 
The board of directors of the bank on April 5 had approved a scheme of amalgamation with Indiabulls Housing Finance.
 
The RBI's rejection of amalgamation comes shortly after it had initiated Prompt Corrective Action (PCA) against the Lakshmi Vilas Bank, owing to high non-performing assets (NPA) and others.
 
On Sep 28, the bank announced: "The RBI has initiated PCA on account of high net NPA, insufficient capital to risk assets weighted ratio (CRAR, also known as capital adequacy ratio CAR) and common equity tier-1, negative return on assets for two consecutive years and high leverage."
 
The PCA comes after the RBI carried out an on-site inspection of the Bank on March 31 under Risk Based Supervision.
 
According to the bank, the Reserve Bank has advised the RBI on the restrictions imposed and the actions to be taken.
 
The Lakshmi Vilas Bank said it will report the monthly progress on the RBI directions.
 
"The PCA is aimed at improving the bank's performance and will not have any adverse impact on its normal day-today operations, including acceptance/repayment of deposits in the normal course," the bank said.
 
Meanwhile the credit rating agency, Brickwork Ratings India Pvt Ltd has revised the rating from "BWR BBB -" (Credit Watch with Developing Implications) to "BWR BB+" (Credit Watch with Developing lmplications) for the bank's unsecured redeemable non-convertible subordinated lower tier II bonds - Series VII (Option B), of Rs.50.50 crore.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    Girija Santhanam

    4 days ago

    This is a good move by RBI. Needs to be appreciated. It is better that LVB is liquidated.

    SBI cuts interest rates on savings deposits to 3.25%
    The State Bank of India (SBI) on Wednesday cut interest rate on savings deposits, with a balance of upto Rs 1 lakh, by 25 bps to 3.25 per cent from November 1, and slashed retail & bulk term deposit interest rates by 10 and 30 bps respectively for 1 year to less than 2-year tenor from October 10.
     
    "In view of the adequate liquidity in the system, the State Bank of India announces revision in interest rate on Savings Bank Deposits (with a balance upto Rs 1 lakh) from 3.50 per cent to 3.25 per cent w.e.f. 1st November 2019. Bank also slashes its Retail TD and Bulk TD interest rates by 10 bps and 30 bps respectively for 1 year to less than 2 years' tenor w.e.f. 10th October, 2019," the SBI said in a statement. 
     
    SBI shares were trading at Rs 254.95, up Rs 5.85 (2.35%) recovering more than 4 per cent from lows. 
     
    Earlier, the bank lowered its Marginal Cost of Funds based Lending Rate or MCLR by 10 basis points across all tenors to 8.05 per cent from October 10, a move that is likely to make home and other retail loans cheaper for the existing borrowers. 
     
    This is the sixth cut in MCLR in FY 2019-20 and it comes days after the Reserve Bank of India (RBI) lowered the repo rate by 25 basis points. 
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    Girija Santhanam

    4 days ago

    I hear that the FD rates will be slashed to 5% next year because SBI is unable to handle the huge number of deposits and want people to invest in their mutual funds business.
    In the future, one can expect that interest rates on savings bank balances will be made 0. You won't earn any interest on SB account balances. The interest on FDs will be reduced. Scamsters and fraudsters will enjoy the fruits of someone else's labor. The media will earn their money by sensationalizing the issue. The Government will form one more committee which will eat into the exchequer's funds and make recommendations that will certainly not lead to reduction in the scams.
    What do all these indicate?
    The Govt & RBI are not doing anything to protect the consumer.
    Tax the middle class more and more; let the so-called entrepreneurs enjoy more and more credit; let bankers make money by taking bribe and giving loans; Money Life and the team will be forever busy reporting such incidents. But will something change at the ground level? Nay.

    GLN Prasad

    1 week ago

    How pathetic? During the past, savings were treated as a virtue and spending as a crime. The Government can utilize savings from the public in welfare activities and can pay higher interest to encourage savings. Senior citizens can never take a risk in keeping life long savings, kept in reserve for medical emergencies in SB account gets a lower rate of interest, and in some cases, if they are greedy, there may RBI restrictions limiting the amount of withdrawal also. The government should consider ways to encourage savings as the welfare of the public and economy is not the only way for prosperity.

    Ramesh Poapt

    1 week ago

    sorry for diversion. but ML, to the best of my knowledge
    ,did not give details of small saving schemes from 1st oct.19
    though it remained unchanged.
    it is great relief for senior citizens and should be appreciated.

    Newme

    1 week ago

    In read somewhere that interest rates were 20% on fixed deposits in 1980s. Will it reach negative rate like in Japan, Germany in another 30 years?

    SBI cuts lending rates by 10 bps, retail loans to get cheaper
    The State Bank of India (SBI) on Wednesday announced lowering its marginal cost of funds based lending rate (MCLR) by 10 basis points across all tenors to 8.05 per cent from October 10. The MCLR cut will make home and other retail loans cheaper for the existing borrowers.
     
    The bank's one-year MCLR has been brought down from 8.15 per cent per annum to 8.05 per cent per annum. This is the sixth cut in MCLR in FY 2019-20 and it comes days after the Reserve Bank of India (RBI) lowered the repo rate by 25 basis points. 
     
    "In view of the festival season and to extend the benefit to customers across all segments, the SBI has reduced its MCLR by 10 bps across all tenors," the country's largest state lender said in a statement. 
     
    MCLR refers to the minimum interest rate of a bank below which it cannot lend, except in some cases allowed by the RBI. MCLR rates are based on a bank's own cost of funds. So if an existing home loan is linked to the SBI's MCLR rate, the latest cut may not bring down its EMIs immediately. MCLR-based loans generally have a one-year reset clause. 
     
    To new borrowers, the SBI now also offers a repo-rate linked home loan scheme. Under this scheme, the loan rate gets adjusted as and when the RBI revises its benchmark rate. 
     
    The SBI charges a spread of 265 basis points over the RBI's repo rate (currently at 5.15 per cent) to calculate its external benchmark-based lending rate. The bank also charges a premium for effective home loan rate to keep its margins intact.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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