DBS faces legal tussles following takeover of Lakshmi Vilas Bank in India
After DBS Group Holdings Ltd. took over the ailing Lakshmi Vilas Bank (LVB), the former has been faced with multiple lawsuits in the country.
The holders of Lakshmi Vilas Bank Ltd.'s equity shares and Tier-II bonds that were written off before the effective date of amalgamation took legal actions against DBS's local unit in various high courts in India.
After the approval from the Reserve Bank of India (RBI), the amalgamation of LVB and the Indian unit of DBS was completed on November 27, 2020. This is the first time when the RBI gave approval to a foreign lender for bailing out an ailing bank.
There are currently five petitions challenging the merger in four high courts - Madras, Bombay, Karnataka and Delhi. The scheme of amalgamation of the two entities has also been challenged. The RBI has filed a plea in the Supreme Court to transfer all cases to the Bombay High Court.
The petition alleged that LVB's shareholders have been "left in the lurch" and that the Centre and the RBI have failed to protect their interests.
According to DBS, although the suits DBS's India unit has been named as a respondent, the primary respondents would be the Indian government and the RBI, who drafted and approved the amalgamation program.