It was reported in the Indian media today that an Indian MP and BJP member, Subramanian Swamy, has asked the Indian government to put the Lakshmi Vilas Bank (LVB) merger with DBS Bank India on hold (‘Subramanian Swamy asks PM Modi to put LVB merger with DBS on hold‘, 4 Dec).
Sawmy has sought to put the LVB-DBS merger on hold in order to facilitate a forensic audit of the takeover of the assets of LVB by DBS. Swami called for an examination of the allegations against the DBS made internationally and in the company’s home country, Singapore, on money laundering.
In his letter to PM Modi, Swamy said, “What is amazing is that RBI had sought objections from stakeholders which were to be filed by the close of business hours on November 20, 2020, effectively giving less than 72 hours to them to respond.”
He noted that several stakeholders, notably the bond and shareholders, had raised objections to the scheme. However, the RBI forwarded the draft proposal for Cabinet’s approval in great haste on November 25, without factoring any such objections. Subsequently the merger came into effect on November 27.
Swamy alleged that the haste with which RBI carried out the LVB-DBS merger, the unprecedented and unreasonable terms under which the bond and shareholders’ interest have been written off, and the arbitrary manner in which DBS Bank India was chosen without going through any standard operating procedure, raise serious questions on the functioning and integrity of Reserve Bank of India (RBI), which is India’s central bank.
He added that despite the fact that the RBI is armed with extraordinary regulatory powers as well as the Boards of all Banks including LVB’s are represented by RBI’s nominees, banks after banks have suffered losses with their non-performing assets (NPA) rising.
Swamy said there is a serious flaw in the functioning of RBI and lack of accountability inside the central bank.
Meanwhile, it has also been reported that DBS Bank India has already received the capital infusion of Rs2,500 crore (S$450 million) from DBS Bank Limited, Singapore, as stipulated in the agreement as part of the condition for the LVB-DBS merger.