The loss-making Lakshmi Vilas Bank (LVB) said it will continue its evaluation process for an amalgamation of Clix Group with it. The bank authorities also added that mutual due diligence is substantially complete and the bank is now in a crisis after shareholders blocked the appointment or re-appointment of seven directors to the board which included Mr S Sundar, MD & CEO.
Re-appointment of Statutory Auditors P Chandrasekar LLP, Chartered Accountants was voted against and the AGM authorized the bank to raise the capital via an FPO, rights issue, QIP or another route and increase the lender’s share capital to Rs. 1,000 crore from the current Rs. 65 crore. Also, the bank has added that it would continue its focus on capital-light loans like Gold loans to optimize the profitability without putting a strain on the capital funds.
The bank made a loss of Rs. 237.25 crore in the Q1FY20 and income has also come down by 20%. Also, there is an expectation of further deterioration in the asset quality. The Gross NPA rose to 25.40% from 17.30% and net NPA increased to 9.64% from 8.30%.
The annual report reveals the capital adequacy ratio of just 1.12% as on 31st March against the requirement of 8% as per RBI guidelines. The Tier I and II components of CAR stood at 0.88% and 2% respectively.
It may be recalled that LVB had attempted to merge with Indiabulls Housing Finance last year but Reserve Bank of India rejected the deal.
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