Government of India imposed a one-month moratorium on Lakshmi Vilas Bank on 17 November 2020 and restricted cash withdrawals up to Rs. 25000 for its depositors.
The Lakshmi Vilas Bank is suffering losses since last three years and has not been able to maintain financial discipline. The Bank is facing a continuous withdrawal of deposits resulting in low level of liquidity, which led to continuous deterioration in its performance.
The Reserve Bank of India after considering the fact, decided that in the absence of any viable revival plan, with a view to safeguard depositors’ interest and in the interest of the financial and banking industry's stability, there is no other option but to impose a moratorium under Section 45 of the Banking Regulation Act, 1949. After considering RBI’s recommendation, the Central Government imposed a thirty days moratorium w.e.f 17-11-2020.
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