LVB shares jump over 5 pc after RBI appoints panel to oversee bank

Shares of Lakshmi Vilas Bank (LVB) on Monday pared early losses to close higher by 5 per cent after the Reserve Bank of India approved appointment of three-member Committee of Directors (CoD) to run the daily affairs of the debt-ridden firm.

Shares of Lakshmi Vilas Bank (LVB) on Monday pared early losses to close higher by 5 percent after the Reserve Bank of India approved the appointment of a three-member Committee of Directors (CoD) to run the daily affairs of the debt-ridden firm. The stock bounced back during the fag-end of the trade and gained 5.21 percent to close at Rs 20.20 on the BSE.

During the day, it declined by 5.72 percent to Rs 18.10. On the NSE, it rose by 5.21 percent to close at Rs 20.20. During the day, it tanked 6.25 percent to Rs 18.

After shareholders ousted seven directors of the board, the Reserve Bank of India has approved the appointment of three-member CoD to run the daily affairs of LVB. This CoD will exercise the discretionary powers of MD (managing director) and CEO (chief executive officer) in the ad-interim, the bank said in a statement on Monday.

The RBI on September 27 appointed the CoD composed of three independent directors Meeta Makhan, Shakti Sinha, and Satish Kumar Kalra, it said, adding that the committee will be headed by Meeta Makhan. On Friday, shareholders of LVB ousted seven directors, including its MD & CEO and auditors at the AGM.

The truncated board sought to assuage investors stating that the bank's liquidity situation was comfortable and assured the depositors that their money was safe. "With Liquidity Coverage Ratio (LCR) of about 262 percent as on September 27, against minimum 100 percent required by RBI, the deposit-holders, bond-holders, account-holders, and creditors are well safeguarded," the statement said. Lakshmi Vilas Bank will continue to share information on the developments in the public domain as and when they materialize, and as required by applicable law, it added.

The bank's troubles started after it shifted its focus to lend to large businesses from SMEs.