As per a resolution passed by its board, the Lakshmi Vilas Bank has got approval for raising funds by way of equity shares and other instruments through various modes
The Chennai-based private bank was jolted on September 25 when its shareholders voted out seven directors on its board, including CEO S Sundar and promoters KR Pradeep and N Saiprasad. (Reuters photo)
Cash-strapped Lakshmi Vilas Bank (LVB) on Monday said its board will meet later this week to consider issuance of shares on rights basis to existing shareholders. “A meeting of the board will be held Thursday, October 15, 2020 to consider and approve the issue of securities of the bank to existing shareholders of the bank on rights issue,” it said in a regulatory filing. As per a resolution passed by its board and shareholders in August and September respectively, the bank has got approval for raising funds by way of equity shares and other instruments through various modes, including further public offer, rights issue or qualified institutions placement for an aggregate amount of up to Rs 1,000 crore.
Last week, the lender said it has received a non-binding offer from Aion-backed non-banking finance company Clix group for a merger. The Chennai-based private sector bank was jolted on September 25 when its shareholders voted out seven directors on its board, including CEO S Sundar and promoters K R Pradeep and N Saiprasad. Following this, the Reserve Bank of India (RBI) appointed a three-member team to run the bank under Meeta Makhan as chairperson and Shakti Sinha and Satish Kumar Kalra as members.
If the merger with Clix materialises, the networth of the bank will more than double to Rs 3,100 crore from the current Rs 1,200 crore. Clix Capital has a networth of Rs 1,900 crore that will become the networth of the bank after the deal. The lender has been dogged by high bad loans and the attendant regulatory curbs since 2019. In September, its board had approved fundraising plans for Rs 1,500 crore and also to increase foreign shareholding to up to 74 per cent from 12.35 per cent. The bank had posted a net loss of Rs 112.28 crore in the June 2020 quarter. Almost a fourth of its advances are dud assets now, with gross non-performing assets of 25.40 per cent as of June-end, against 17.30 per cent a year ago. Lakshmi Vilas Bank’s shares closed 3.89 per cent lower at Rs 18.55 apiece on BSE.