The BSE issued a notice (20201118-28) on November 18, 2020 regarding the moratorium imposed on Laxmi Vilas Bank.
This notice came in the wake of the financial troubles associated with the bank, and the subsequent moratorium that was imposed by the Center. Lakshmi Vilas Bank booked a net loss of Rs. 397 crore in the September quarter of FY21, as against a loss of Rs. 112 crore in the June quarter.
Earlier, in September 2019, the bank was placed under the prompt corrective action (PCA) framework. The RBI concluded that in the absence of a credible revival plan, it was the right move to apply to the Central Government for the imposition of a moratorium under section 45 of the Banking Regulation Act, 1949. This was done with a view to protect depositors’ interest and to maintain financial and banking stability.
Upon considering the RBI’s request, the central government imposed a moratorium for 30 days effective Tuesday.
Pursuant to that moratorium, the notice from BSE informed members that since the maximum limit of withdrawal was capped at Rs. 25,000, there was a possibility that debit of XSIP/ISIP orders and lumpsum order payment initiated through OTM using Laxmi Vilas Bank mandate may be rejected by the bank.
Members were also required to note that orders could also be rejected where the payment mode selected was ‘Nodal or UPI for Laxmi Vilas Bank.’