New Delhi: The Reserve Bank of India (RBI) has imposed several restrictions against lending under the Quick Corrective Action (PCA) regime against private sector Lakshmi Vilas Bank in view of its weak financial condition. The Reserve Bank has taken this decision in view of the high level of blocked loans of this bank, lack of sufficient capital to hedge the risks and losses on assets for two consecutive years.

Laxmi Niwas Bank has been banned under the PCA for lending, opening new branches and paying dividends. The bank will also have to work on reducing the loans given to select areas. Lakshmi Vilas Bank reported this to the regulator on Saturday. The Reserve Bank has taken this action at a time when the Economic Offenses Wing of Delhi Police has registered a case against the board of directors of Laxmi Vilas Bank for fraud and misappropriation of funds.

The proposed merger of Indiabulls Housing Finance with Lakshmi Vilas Bank is stuck in the middle due to prompt corrective action by the Reserve Bank. The merger is not yet approved by the Reserve Bank. The Reserve Bank has initiated this action following an investigation conducted under risk monitoring for the financial year ended 31 March 2019.

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