The Reserve Bank of India (RBI) has allowed a Committee of Directors (CoD) composed of three independent directors to run the day-to-day affairs of Lakshmi Vilas Bank (LVB). This CoD will exercise the discretionary powers of MD & CEO temporarily.

Meeta Makhan, Chairperson of the Committee of Directors and members Shakti Sinha and Satish Kumar Kalra, will now run the operations, as part of the CoD, as approved by the central bank.

LVB earlier sought to soothe its depositors and shareholders via a statement issued on Sunday, saying its liquidity position remains comfortable, and that the board along with senior management would continue to manage the daily affairs of the bank.

The statement was issued after its shareholders voted against the appointment of seven of its directors, including the managing director and chief executive officer, at the bank’s recently held Annual General Meeting (AGM).

Also read: Lakshmi Vilas Bank - RBI’s latest headache

“Certain news items have appeared, expressing concerns about the governance of the Bank,” it said in the release. LVB said its liquidity position is “comfortable as on date”, and that its Liquidity Coverage Ratio (LCR) is at about 262 percent, against minimum 100 percent required by RBI.

The Bank said it continues to enforce cost reduction measures for both direct and indirect costs. It added that the bank’s provision coverage ratio (PCR) remains healthy at 72.6 percent, against the minimum of 70 percent prescribed under prompt corrective action. Besides existing business, the Bank said it would continue its focus on capital-light loans.

“Till a new managing director is appointed, the existing senior management team along with the Board of Directors will discharge the day-to-day affairs of the Bank as usual,” LVB said.

At the bank’s AGM held on September 25, shareholders had rejected the appointment of S Sundar, MD & CEO of the bank, and that of six other non-executive, non-independent directors including N Saiprasad, G Jaganmohan Rao, Raghuraj Gujjar, KR Pradeep, BK Manjunath and YV Lakshminarayana Murthy.

The appointment of three other directors was approved by shareholders, namely Shakti Sinha, Satish Kumar Kalra and Meera Makhan. The bank has two other directors on the board who have been appointed by the Reserve Bank.

Lakshmi Vilas Bank said that all the existing employees would continue to be in “full service as usual, and remain ever committed as usual to serve customers”.

Its shareholders have approved increasing the Authorized Share Capital to Rs 1000 crores, subject to RBI approval. Additionally, shareholders have also approved raising funds via an FPO, Rights Issue, QIO or other available routes, it said.

“The Bank will continue the process of considering and evaluating the proposed amalgamation of the Clix Group with the Bank, and as was previously informed on 15th September 2020, the mutual due diligence is substantially complete,” it added.

Lakshmi Vilas Bank reported gross non-performing assets of over 25 percent, and net non-performing assets of almost 10 percent for the June quarter. As against the minimum requirement of 8.875 percent tier-1 capital ratio, LVB reported only -0.88 percent capital.

First Published:Sept 27, 2020 8:05 PM IST