Lakshmi Vilas Bank Lent Heavily To Nirav Modi, Jet Airways: Bank Employees Association

Lakshmi Vilas Bank Lent Heavily To Nirav Modi, Jet Airways: Bank Employees Association

The All India Bank Employees Association (AIBEA) has hit out at the moratorium imposed on the Lakshmi Vilas Bank (LVB) alleging that the present poor financial health of the bank is because of several heavy loans worth Rs 2,000 crore to borrowers such as Religare, Jet Airways, Cox and Kings, Nirav Modi group, Coffee Day Enterprises, Reliance Housing Finance, etc.

C.H, Venkatachalam, General Secretary of the AIBEA has questioned the bad loans and claimed that the Reserve Bank of India (RBI) was well aware of the continuous loss that the Lakshmi Vilas Bank was suffering from.

In a statement, he has demanded a thorough probe into the culpability of the RBI and to merge the Tamil Nadu-based private sector bank into a public sector bank. He has also demanded the government to take action against those officials of the Lakshmi Vilas Bank who were responsible for the mismanagement.

The association claims that the heavy loans were known to the RBI as it had its nominee as Director on the Board of the bank. The Bank was also put of prompt corrective action (PCA) norms indicating that it needed correction.

AIBEA said that they have been demanding timely action by the RBI on the deteriorating health of the Lakshmi Vilas Bank but no pro-active action was taken. It has demanded RBI's role to be thoroughly probed as the central bank is responsible for maintaining the stability of the country's financial sector.

On November 17, 2020, the central government placed the Lakshmi Vilas Bank under moratorium, capping the cash withdrawals from its customer's accounts at Rs 25,000 a month, which will be effective up to December 16, 2020, under section 45 of the Banking Regulation Act, 1949. The government took the step on RBI's advice due to the bank's declining financial health.