SC stays HC order for shr valuation in Lakshmi Vilas-DBS Bank merger
This story was originally published at 14:54 IST on 24 July 2024
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--SC stays HC order on Lakshmi Vilas Bank-DBS Bank merger
--CONTEXT:HC asked RBI to value shrs afresh in Lakshmi Vilas-DBS merger
NEW DELHI – The Supreme Court today stayed the Madras High Court's order asking the Reserve Bank of India to conduct a valuation of the assets and shares of both Lakshmi Vilas Bank and DBS Bank India on the date before its amalgamation in 2020 and take a fresh decision on reduction of the value of shares and writing off the tier-II bonds.
The apex court issued a notice to AUM Capital Market, the Centre, the two banks and other parties. The RBI had moved the Supreme Court challenging the Madras High Court order.
The shareholders and bondholders of Lakshmi Vilas Bank had moved the high court against the RBI's decision to amalgamate Lakshmi Vilas Bank with DBS Bank India. Though the high court refused to interfere with the merger, it passed certain directions. "We trust that the same (decision to reduce value of shares and write off tier-II bonds) would be done keeping in mind the grievances of the shareholders and the bondholders and the hardship faced on account of the scheme of compulsory amalgamation and amelioration of the same to the extent possible," the high court said.
The RBI and the government had taken the stand that Lakshmi Vilas Bank was in financial difficulty and their prompt action was necessary to protect the interests of the depositors. Shareholders and bondholders of Lakshmi Vilas Bank suffered losses as tier-II bonds worth 3.18 bln rupees and the entire equity capital of Lakshmi Vilas Bank were written off as part of the merger.
The top court is also hearing a related case against a Bombay High Court order that had set aside the Reserve Bank of India's decision to write off additional tier-1 bonds worth 84 bln rupees of YES Bank. End
Reported by Surya Tripathi
Edited by Saji George Titus
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