Lakshmi Vilas Bank share trading suspended!

Shares of Lakshmi Vilas Bank (LVB) were suspended from November 26, 2020, from the NSE, as the bank is set to merge with DBS Bank on November 27 and the stock will be delisted from tomorrow.

• The RBI has put Lakshmi Vilas Bank (LVB) under a moratorium, with effect from 6 pm on 17 November till 16 December. The depositors will not be allowed to withdraw more than ₹25,000 till the moratorium gets over. The bank will also get merged with DBS. 
• As per the draft scheme proposed by the RBI, from the appointed date when the merger becomes effective, the paid-up share capital and reserves and surplus of Lakshmi Vilas Bank shall be written off. Accordingly, the shares of Lakshmi Vilas Bank will get delisted from the exchanges and will be valued at zero.

INDmoney Analysis

INDmoney had advised investors to exit their holdings in the beleaguered bank last month itself, after Brickwork Ratings India had downgraded the ratings on Lakshmi Vilas Bank. The bank had gone into a major crisis after the shareholders rejected the CEOs and some board members. We had reiterated that investors exit their holdings in the bank last week, after RBI put the bank under the moratorium.(Click to read)

Indiabulls Housing Finance holds a 4.99% equity stake in the bank, while Srei Infrastructure Finance holds 3.34% and Capri Group holds 3.82%. We had advised investors to exit their debt holdings in Indiabulls Housing Finance on Nov 24th after Moody’s raised concerns that the Asset Quality of this NBFC will deteriorate going forward. (Read more)

Last week, SREI Infrastructure Finance Ltd. (SIFL) announced that the company and its wholly-owned subsidiary SREI Equipment  Finance Ltd.(SEFL) have been undergoing a special audit, conducted by an auditor appointed by Reserve Bank of India (Read more). This is generally undertaken if the credit quality of the lending company has significantly worsened. We advise you to exit your holdings to this group as well.

Please find your exposure to shares of Lakshmi Vilas Bank, Indiabulls Housing Finance and SREI Infrastructure through equities and mutual funds. Also find your exposure to bonds of Indiabulls Housing Finance through debt mutual funds.