In Sep, it was reported that 2 employees of Lakshmi Vilas Bank (LVB) have been arrested for their alleged involvement in the misappropriation of a customer’s fixed deposits from the bank.
A total amount of some Rs729 crore (S$132 million) belonging to Religare Finvest Limited (RFL) was alleged to have been embezzled by the 2 LVB’s staff, Pradeep Kumar and Anjani Kumar Verma. They both held senior positions in LVB.
In was said that several fixed deposits were placed with LVB by RFL between Nov 2016 and Jan 2017. Some time later, it was discovered that a total amount of Rs7,237,150,920 was debited from RFL’s account without the knowledge of RFL. Subsequently, RFL reported the matter to the Indian police in 2018. The case was formally registered by the police on 23 Sep last year. It then took about a year for the police to arrest the 2 LVB’s staff.
During the investigation, it was discovered that many grave irregularities and violation of rules and regulations were sanctioned by LVB’s staff. It was also alleged that LVB’s staff were colluding with external parties in siphoning off RFL’s fixed deposit money from the bank.
LVB’s problems become DBS Bank India’s problem?
Last month, India’s central bank, Reserve Bank of India (RBI), seized control of the struggling LVB and “forced a merger” with DBS Bank India, which is wholly owned by DBS Singapore. Bloomberg has described the merger as a “rescue effort” by DBS.
On 27 Nov, LVB was formally absorbed into DBS Bank India and thereby, ceased to exist. Not long after LVB was merged with DBS Bank India, RFL filed a petition with the Delhi High Court to make DBS Bank India a respondent in its ongoing lawsuit with LVB, on the ground of the merger of the two banks.
Last week, the Delhi High Court formally sought a response from DBS Bank India with regard to the matter. Justice Rajiv Shakdher issued a notice to DBS Bank India on the RFL’s application seeking to substitute the bank with LVB following the merger.
The high court, in its order on 1 Dec, has given DBS Bank India 5 weeks to respond and listed the matter for further hearing on February 25, 2021.
“In view of these recent developments it has now become imperative that LVB, that is, the transferor bank as per the scheme and the present defendant be substituted by the transferee bank, that is, DBS and the amended memo of parties be taken on record,” RFL’s plea stated.
“The present application is being filed under Order XXII Rule 10 of the Code of Civil Procedure, 1908 for substitution of the defendant, Lakshmi Vilas Bank (LVB) with DBS Bank India Limited (DBS).”
RFL has also sought a declaration that LVB’s liquidation of lien-free and unencumbered fixed deposits held by it aggregating to Rs791.44 crore (S$143 million), including interest, is illegal and wanted the amount to be recovered.