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With a view of reducing the amount of withdrawals in the private sector, the Central Government has placed the private sector lender Lakshmi Vilas Bank under the scheme of the moratorium. This scheme of the moratorium would be operative from 17 November 2020 for a period of one month till 16 December 2020.
Table of Contents
After consultation with the Reserve Bank of India (RBI) the Central Government has taken major steps to place this bank under the scheme of moratorium.
The following are the main objectives of placing LVB in Moratorium:
The Central Government issued the order in consultation with the RBI to place all the accounts operating under Lakshmi Vilas Bank[1] under the scheme of moratorium.
The following order was considered under this scheme:
Yes there are few exemptions available for depositors if they consider taking consent from the Reserve Bank of India (RBI) to meet some form of emergency or extraordinary expenses such as:
As a result of this order on Lakshmi Vilas Bank, public depositors would be affected drastically. They would not be allowed to take out any deposits for any sum more than Rs.25, 000/-.
There is no plan for financial stability related to this private sector lender. Hence the government has placed this bank under moratorium.
The Central Government has also considered discussions between Lakshmi Vilas Bank (LVB) and DBS Bank India Ltd (DBIS) a banking company which is incorporated under the provisions of the Companies Act, 2013[2]. Such scheme of amalgamation is placed between both parties for any comments and objections.
Read our article:Clarification Needed Over NBFCs Term Loan Moratorium from RBI
Varun Hariharan has completed the Legal Practice Course from BPP Law School, Manchester. He has a Masters in Commercial and Corporate Law from the Queen Mary University of London and LLB Honours from Bangor University, UK. He specialises in law related to corporate, artificial intelligence and technology law.
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