Lakshmi Vilas Bank plunges 5% as RBI puts lender under PCA framework

NEW DELHI: Shares of Lakshmi Vilas Bank (LVB) fell 5 per cent in Monday’s trade after the Reserve Bank of India initiated Prompt Corrective Action (PCA) against the bank due to high level of bad loans, lack of sufficient capital to manage risks and negative return on assets for two consecutive years.

Following the development, the scrip hit its 5 per cent lower circuit limit at Rs 34.75 on BSE

The bank said it will continue to undertake lending activities to all segments except corporates and other stressed and high-risk sectors.


The bank said that it is in the process of implementing corrective measures to recover NPAs, reduce costs, boost capital and downside RWAs and improve profitability.

The lender said that it is exploring various avenues for raising capital to shore up its CRAR. “Similarly, the bank is putting in place strategies to recover NPAs.

Meanwhile, the bank reassured its customers that the bank can transact normal business. “PCA does not mean moratorium on the bank,” LVB said in a BSE filing.

The Indiabulls Group, which is actively chasing its merger with Lakshmi Vilas Bank, has indicated that if the RBI wishes, then its chairman Sameer Gehlaut will be neither the chairman of the merged entity nor hold a board position.