The Reserve Bank of India (RBI) has initiated Prompt Corrective Action (PCA) against Lakshmi Vilas Bank Limited (LVB) on account of high net NPAs, insufficient Capital to Risk (Weighted) Assets Ratio (CRAR) and Common Equity Tier 1 (CET 1), negative return on assets for two consecutive years and high leverage.
PCA was initiated after an on-site inspection, under the risk based supervision, was carried out for the year ended March 31, 2019. The banking regulator has advised the bank on restrictions put in place and the actions it needs to take.
LVB said that it had taken note and would report progress on a monthly basis to RBI.
PCA is aimed at improving the performance of the bank and will not have any adverse impact on the day-today operations of the bank, including acceptance/repayment of deposits in the normal course, LVB said.
LVB reported a loss of Rs 894.10 crore in 2018-2019 as against Rs 584.87 crore, a year ago.
The bank's total Capital Adequacy Ratio (CAR), in line with Basel III guidelines, was at 6.46 per cent as of June 30, 2019, as against 7.72 per cent as on March 31, 2019, and 9.45 per cent as on June, 30, 2018.
The bank has raised capital amounting to Rs 188.16 crore by way of a preferential issue on private placement basis, under the non -promoter category, to India Bulls Housing Finance Limited.
The bank's Gross NPAs stood 17.30 per cent as on June 30, as against 15.30 per cent as on March 31, 2019, sequentially. Net NPAs stood at 8.30 per cent, as against 5.96 per cent as on June 30, 2018, and 7.49 per cent as on March 31, 2019, sequentially. The provision coverage ratio improved to 63.08 per cent (55.80 per cent as on June 30, 2018, and 62.08 per cent as on March 31, 2019).
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