Lakshmi Vilas Bank which has been merged with DBS India had
- Continuously incurred a loss since the quarter ended 2018, and thus eroded its net worth.
- The bank was in breach of the prompt corrective action (PCA) threshold for all the indicators viz Capital, asset quality, profitability and leverage before the merger
Basel III compliant AT 1 and Tier 2 instruments can absorb losses via conversion into common equity or a write-down. Thus as per RBI guidelines bonds of value Rs. 368.20 crore can absorb losses. The bonds issued between March 2014 and June 2017 and maturing between March 2024 and September 2025 carried a coupon rate which ranged between 10.7 per cent and 11.8 per cent.
More details are available vide the appended news item.
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