BUSINESS

‘Acquisition of LVB to boost DBS India business’

The Reserve Bank of India’s (RBI) draft scheme to amalgamate the troubled Lakshmi Vilas Bank into DBS Bank India will strengthen the business position of the wholly owned unit of Singapore’s DBS Bank Ltd. in India by adding new retail and small- and medium-sized customers, Moody’s Investors Service said in a statement.

“We estimate that DBS India’s customer deposits and net loans will increase by about 50%-70%... LVB will also add around 500 branches to DBS India’s 27 branches,” Moody’s said. It said the acquisition would be positive for depositors and senior creditors of LVB as the bank would benefit from parental support from DBS, “a very strong bank.”

LVB’s rescue process flagged deficiencies in the bank resolution mechanism as the moratorium restricts full and timely payments, thus leading to a temporary default, Moody’s added.