Lakshmi Vilas Bank placed under moratorium; withdrawals capped at Rs 25,000

The sudden announcement to impose a moratorium that restricts LVB customers from withdrawing money for a month is ostensibly aimed at facilitating the ‘deal’ and saving a failed bank. DBS, backed by the Singapore government, is a more eligible suitor than other investors snooping around LVB for a year. But the moratorium is inexplicable: loyal depositors of LVB have been unperturbed by the capital erosion of the bank since 2019; despite fall in stock price and inability of the LVB management to rope in new investors, they never pulled out money. Indeed, an announcement to merge with the DBS subsidiary, sans the moratorium, could have also given the old bank a new life.