Lakshmi Vilas gets 'religared'

Lakshmi Vilas Bank figures among the top five losers on the BSE currently; it went down to Rs.113.70, a decline of over 3%.

The stock has slid after Religare announced that it has sued the Bank for invoking fixed deposits. The  Bank has stated that in its audited financial statement, it has been reported that the advances of the bank (net of provisions) was Rs.25768 crore after the adjustment of third party deposits amounting Rs.794 crore. The said deposits relates to .Religare Finvest Ltd and the same were held as security for the loans extended to M/s.RHC Holding Pvt.Ltd & M/s.Ranchem Pvt Ltd. On account of default in clearing the loans, the said deposits were closed and the proceeds were adjusted to clear the said loan loans. As per legal opinion received by the bank, the adjustment of deposits against loans are lawful but Religare Finvest has filed a suit against its Janpath Branch before the Hon'ble High Court Delhi, disputing the said adjustment and the same is being defended appropriately by the Bank.

Religare on its part has said, “The company had made certain fixed deposits with Lakshmi Vilas Bank (“LVB”) in November 2016 and January 2017. LVB vide its letter dated 7th February 2018 had confirmed fixed deposits of Rs.79,144.77 lakhs to the Company. RFL received a letter dated February 9, 2018 from LVB purporting to allude to certain loans disbursed by LVB to third parties allegedly in consideration of security of the RFL’s Fixed Deposits (“FDs”) with LVB. By means of this letter, LVB also purported to call upon RFL to execute the security documentation in connection with the alleged loans.

Reacting to this letter, Religare has strongly stated that it gave the Bank no authorization, sanction or approval to do this, yet the Bank went ahead and closed the deposits to liquidate the loans availed by third parties. This was contrary to the confirmation received by the Statutory Auditors in November 2017 via email confirming the fixed deposits. RFL has now filed a suit for recovery of the Fixed Deposit amounts aggregating to Rs.79,144.77 lakhs appropriated by LVB before the Hon’ble Delhi High Court.