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Madras HC orders RBI to conduct comprehensive asset valuations for DBS and Lakshmi Vilas Bank

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The Madras High Court has directed the Reserve Bank of India (RBI) to conduct a comprehensive valuation of shares and assets of DBS Bank India and Lakshmi Vilas Bank (LVB) as they stood prior to their amalgamation in November 2020. This valuation will provide clarity on the impact of the merger on stakeholders.
Based on this fresh valuation, the RBI is expected to reassess its decision on the reduction of share value and the write-off of tier-2 bonds within a period of four months.

This court order is in response to a suit filed by bondholders and minority shareholders of LVB, challenging the write-down of their investments. The complaint stemmed from the moratorium imposed on LVB before its amalgamation with DBS Bank India.

The court made it clear that its order does not interfere with the amalgamation decision itself. Rather, it acknowledges the concerns of investors in these bonds, stating that many are akin to depositors. The court noted that a review of the RBI’s decision should consider the grievances of the shareholders and bondholders and seek to mitigate any hardships caused by the compulsory amalgamation.

The ruling follows a series of extensive hearings on the cases filed against the merger. The cases had been transferred to the Madras High Court from various High Courts across India by the Supreme Court in 2022.

The court’s directive is seen as a significant step in addressing the grievances of stakeholders affected by the merger. It emphasizes the need for a transparent and fair valuation process to ensure that all parties involved are treated equitably.with TOI inputs

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