Chennai: “LVB has about 20 lakh depositors and lakhs of borrowers. It has 563 branches, about 970 ATMs and about 4,000 staff. These are being offered to DBS Bank India free of cost on a platter. It took 94 years to build LVB to this level. All that DBS Bank has to do now is to change the name and command an extensive presence across the country at the cost of retail shareholders,” said K. Ravindrakumar, former Director of LVB.
“It’s really not easy to value the time and efforts; however, today every bank branch is valued at Rs 10 crore, applying which the value of the branch network of LVB will be Rs 5,630 crore,” said Ravindrakumar, the grandson of K.P. Radhakrishna Chettiar, one of the founding members of LVB.
Pointing out the various immovable properties owned by LVB across the country, he said that they were funded by the shareholders and handing over all these to DBS Bank without the shareholders receiving anything amounted to betrayal of their trust in the regulator.
He said such a decision will erode the confidence of the people in equity culture. Many of the LVB shareholders have invested in the bank’s equity about 100 years ago and have stayed on since.
Ravindrakumar said the RBI is adopting different standards for different banks. In the case of Yes Bank, the share capital was not written down but State Bank of India (SBI) was asked to pump in money. In LVB’s case, the RBI is writing off the entire share capital.
Ravindrakumar and other shareholders have suggested to the RBI that DBS Bank can infuse fresh equity at a price that can be arrived at.
“Alternatively, you can go for a capital reduction and fresh investment of equity by the acquiring bank. A thorough valuation of the net worth of LVB should be done by a government recognised third party before any decision is arrived at,” Ravindrakumar told the RBI.
