Govt. notifies scheme of merges of LVB with DBS Bank. Read how depositors shall be treated

Govt. notifies scheme of merges of LVB with DBS Bank. Read how depositors and creditors shall be treated
Due to the rapidly deteriorating financial position of the Lakshmi Vilas Bank Limited, the Reserve Bank had placed the bank under moratorium.
In the interest of the public and in the interest of the depositors of the said bank the RBI had prepared a draft Scheme for amalgamation of the Lakshmi Vilas Bank Limited with the DBS Bank India Limited.

After consultation, the Government has notified Lakshmi Vilas Bank Limited (Amalgamation with DBS Bank India Limited) Scheme, 2020 which will become effective from the 27th day of November, 2020.

The Scheme provides for transfer of assets and liabilities and other technicalities like closure of books and preparation of balance sheet, reorganisation of branches valuation of assets and determination and discharge of liabilities , rights and liabilities of members and creditors of the transferor bank

Payment to depositors of Lakshmi Vilas Bank:

It has been provided that no depositor or creditor shall be entitled to make any demand against the transferor bank or the transferee bank in respect of any liability of the transferor bank to him except to the extent specified by the Scheme.

With regard to the discharge of the existing deposits of the bank, the following guidelines have been made: 

(1) In respect of:

(a) any sums deposited by any employee with the bank as staff security deposits, together with interest, if any, accrued thereon up to the appointed date shall be paid or provided for in full;

(b) every savings bank account or current account or any other deposit account including a fixed deposit, cash certificate, monthly deposit, deposit payable at call or short notice or any other deposits by whatever name called with the LVB, the DBS bank shall open a corresponding and similar account in the name of the respective holders thereof crediting thereto full amount including interest to the extent payable under the Scheme:

Provided that if DBS bank have a reasonable doubt about the correctness of the entries made in any particular account, it may with the approval of the Reserve Bank withhold the credit to be made in that account for a period not exceeding three months from to ascertain the correct balance in such account.

(2) In respect of any interest bearing deposit accounts, the DBS bank shall pay interest at the rate applicable in accordance with the prevailing policy of transferor bank till the appointed date and in respect of balances in any current account or any other non-interest bearing account, no interest shall be payable to the account holder nor shall any account holder be entitled to claim any compensation for the non-payment of any deposit or other money from his account during the period from the 17thday of November, 2020 till the appointed date.

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