The day after the RBI put the proposed merger between Lakshmi Vilas Bank (LVB) and a Singapore-based DBS subsidiary into the public domain, the public sector banking board AIBOC said Wednesday that the merger was not in the national interest. Integration with PSB. The proposed merger between LVB and DBS Bank India, which is struggling to raise funds, seems to be a strategy to provide large-scale entry of foreign banks into the country, said Sunil Kumar, chairman of the Bank of India Executive Federation (AIBOC).
He said foreign banks have long been considering inorganic routes to expand their presence, as India’s banking sector offers great opportunities for growth. Kumar expressed concern that the unlimited entry of foreign banks would “lead the country to economic slavery and plunder their resources.”
As a stakeholder, he added that the AIBOC urges the Reserve Bank of India (RBI) to reconsider its position on the proposed merger for the national interest. A draft merger scheme announced by RBI on Tuesday proposes to merge troubled private sector lender LVB with Singapore-based DBS Holdings’ local unit, DBS Bank India Ltd (DBIL). did.
“DBIL has a sound balance sheet and strong capital support. DBIL has sufficient capital but has an additional capital of Rs 2,500 in advance to support the credit growth of the entity after the merger. Brings to you, “says RBI. Older generations of private banks have been servicing the country before independence, and most of it functions as a PSB, Kumar said.
Therefore, he added, it is necessary to merge with a public sector bank (PSB) rather than a subsidiary of a foreign bank to maintain its character. In the past, he said, older generation private banks merged with PSB when they were exposed to financial stress.
“PSB is not only a commercial banker, but also a state-based social banking first, over and over again, and more recently. COVID-19 (new coronavirus infection) (# If there is no character limit, add parentheses when it first appears Kumar added that it is unfair to compare PSBs to private banks. Lenders in the private sector only do banking for profitability.
He said it was the public sector bankers who extended government financial assistance to remote areas, naxalite-affected villages, and poor people’s accounts in hospital locations. DBS has been based in India since 1994. In March 2019, DBS converted its business in India to its wholly owned subsidiary DBIL in order to expand and scale its franchise. DBIL currently exists in 24 cities in 13 states.
The LVB problem began after shifting the focus to lending from small businesses to large corporations. Due to the surge in non-performing assets (NPA), the bank was placed under the RBI’s swift corrective action framework in September 2019. The bank recorded a net loss of Rs 396.99 in the second quarter, which ended in September 2020, up from Rs 357.17. In the same quarter a year ago.
Net NPA or non-performing loans accounted for 7.01% of net loans at the end of September 2020, 10.24% as of March 31, 2020, and 10.47% by September 2019. Launched in 1926, LVB has 566 branches and 918 ATMs in 19 states and one coalition region so far.
AIBOC opposes merger of LVB and DBS Bank, proposes merger with state-owned bank
Source link AIBOC opposes merger of LVB and DBS Bank, proposes merger with state-owned bank