Employee union opposes merger of Lakshmi Vilas Bank with Indiabulls

The All Indian Banks Employees' Association (AIBEA) opposed the merger project of Lakshmi Vilas Bank with Indiabulls Housing Finance Ltd. The badociation has asked the Reserve Bank of India (RBI) not to give the green light to the merger.

Lakshmi Vilas Bank had previously stated that the board of directors had authorized the merger of the bank with Indiabulls Housing Finance Ltd.

Although RBI clarified that the resolution was unanimously approved by the board, the directors appointed by RBI, as is customary at the bank, were not required to participate in the vote. nor to give their point of view. But the union said that the two appointed directors of the RBI on the board of directors of the bank were also present at the board meeting and that the board's decision had been taken unanimously, which implied that the proposal had received the tacit approval of the RBI.

LVB may be a private bank, but bank deposits (about 30,000 crores of rupees) belong to the population and are public money, said CH Venkatachalam, Secretary General of AIBEA.

RBI is aware of the financial health of Lakshmi Vilas Bank Ltd, which has not been bankrupted at all, he added.

During the quarter ended December 2018, the bank recorded a net loss of 373.49 rupees. In 2017-18, the loss was Rs 584.87.

The Bank also suffers from a gross GNP of Rs. 3400 crores, or 14% of total advances.

"In this context, it is surprising that the Board of Directors of the Bank has made the decision to merge with Indiabulls Housing Finance Ltd.

As is already known, Indiabulls Housing Finance Ltd had applied for a banking license to establish a bank, but this was not sanctioned by the RBI, obviously on the grounds that the company does not fall under the appropriate category granted a banking license ", said AIBEA in his letter to RBI.

Having failed to obtain a banking license, it is now established that IBH is trying to become a bank by merging LVB with itself, according to the AIBEA.

The union further alleged that the merger was clearly a short-circuit method used by Indiabulls Housing Finance Ltd and had managed to become a bank through this method.

Given the fragile health of Lakshmi Vilas Bank Ltd, it is necessary that RBI take a holistic view and merge it with one of the public sector public sector banks instead of allowing LVB to merge with IBH, said the union.

"It is not necessary at this stage to discuss the scenario of various private sector banks in our country after the recent episode of ICICI Bank. But it is important to closely monitor the affairs of these private banks that are managing substantial savings. We urge you to give your personal attention in this regard and not to allow things to happen too quickly by allowing the merger, "Venkatachalam said.