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  Crisis in Lakshmi Vilas Bank Lakshmi Vilas Bank (LVB) is in the news, obviously, for wrong reasons. Last week, its officials were arrested by the Economic Offences Wing (EOW) for allegedly adjusting fixed deposits worth Rs.794 cr. placed by Religare Finvest Ltd towards the loans of RHC Holdings and Ranchem. And now in the AGM held on 25 th September 2020, the shareholders have rejected the appointment/reappointment of 7 directors including the Managing Director and also the appointment of Statutory Auditors. Only three directors’ appointments have passed the test of AGM. LVB’s problems came out in the open with the publication of the financial results 2017-18. The bank which reported a net profit of Rs.256 cr. and Gross NPA of 2.67% (Rs.640 cr.) as on 31.03.2017 reported a net loss of Rs.584 cr. and Gross NPA of 9.98%(Rs.2694 cr.) as on 31.03.2018.   The audited financials of 2017-18 also carried a qualified opinion of the statutory auditors about the adjustment of loan...

Waiver of interest on instalment/interest payable during moratorium period   Whether the banks are right in charging interest on instalments or interest that became due and payable during the moratorium period is hotly debated in the Supreme Court and also in the media. As per reports, the government and regulator appear to have taken a stand that if the interest on “instalment not paid/interest charged in the account” is waived, it will affect the financial position of the banks badly, which are already under stress due to substantial increase/expected increase of stressed assets. The argument is weak on several counts. 1.     The court might say the stress in financial assets and consequent decline in the revenue has to be addressed by owners of the banks (including the government) and cannot be passed on to the honest borrowers, who have nothing to do with NPAs. 2.     Even if the court buys this argument, it might still say that not all banks have ...