Fully functional board, comfortable liquidity status: LVB

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SME Times News Bureau | 28 Sep, 2020
As the Lakshmi Vilas Bank shareholders' vote against the reappointment of seven directors to the board raised concerns about its governance and management, the bank has tried to allay the fears, saying that it has a "fully functional" board, including three independent directors.

The bank also said that it is in a comfortable liquidity position as on date with Liquidity Coverage Ratio (LCR) more than the minimum 100 per cent as prescribed by the Reserve Bank of India (RBI).

"Certain news items have appeared, expressing concerns about governance of the bank, based on voting results of the 93rd Annual General Meeting where reappointment of 7 directors were not approved. However, the Bank continues to have a fully functional Board of Directors including 3 independent directors," the bank said in a regulatory filing on Sunday.

Till a new Managing Director is appointed, the existing senior management team, along with the Board of Directors, will discharge the day-to-day affairs of the bank as usual, it said.

In the Annual General Meeting on September 25, shareholders of the bank voted against the reappointment of seven directors to its board, including that of the interim MD and CEO, S. Sundar, who was appointed in January this year.

Interestingly, the shareholders in the bank's Annual General Meeting on September 25, also voted against the reappointment of its statutory auditors.

In its filing on Sunday, the Lakshmi Vilas Bank said that it continues to enforce cost reduction measures both of direct and indirect costs and its provision coverage ratio remains healthy at 72.6 per cent, against the minimum of 70.0 per cent prescribed under PCA.

Further, besides the existing business, the bank will continue its focus on capital-light loans, it added.

"All the existing employees of the bank will continue to be in full service as usual, and remain ever committed as usual to serve customers," it said.

The filing also informed that the shareholders have approved for increase of the authorised share capital of the bank to Rs 1,000 crore, subject to the RBI's approval.

Additionally, to strengthen the bank's capital, the shareholders have approved the resolution authorising the bank to undertake capital raising through FPO, rights issue, QIP or other available routes, it said.

On its proposed merger with Clix Capital, Lakshmi Vilas Bank said that the Bank will continue the process of considering and evaluating the proposed amalgamation of the "Clix Group" with the bank, and the mutual due diligence is "substantially complete".