KOLKATA: Lakshmi Vilas BankNSE 4.90 % (LVB) has adopted a strategy to conserve whatever capital it has ahead of the fiscal-year end, even as the capital-starved lender continued its search for new investors.
The bank has shifted its focus to zero-risk gold loan business, which require no capital to set aside. The micro, small and medium enterprises (MSME) sector remained another focus area, even as it stopped corporate lending, chief executive S Sundar said.
LVB has made its top layer thinner by asking some senior executives to go. The Chennai-based lender has also gone back to branch-intensive banking for greater customer response and asked its sales team and relationship managers to report to branch heads instead of reporting to vertical heads directly.
The lender is ready to give control to new investors as it is desperately looking to raise $250-300 million to augment capital and boost the adequacy ratio from a poor 3.46%, against the regulatory minimum of 9%.
The bank, meanwhile, refuted market fears over safety of public deposits, saying that its liquidity coverage ratio is at a comfortable level more than what is prescribed by the regulator.
“We are in the process of recovering our NPAs and our quantum of NPA has in fact marginally come down in the last quarter. The bank would like to take this opportunity to assure customers that their deposits are safe in our bank,” it said in a filing with stock exchanges.
Its gross NPA in absolute terms came down marginally to Rs 4,081 crore at the end of December from Rs 4,091 crore three months prior, but the NPA ratio rose to 23.27% from 21.25%. This, Sundar said, was because the loan book had shrunk.
LVB had Rs 17,500 crore of loans outstanding at the end of December 2019 as against Rs 27,000 crore in March 2018 around when the financials started turning bad as its stopped lending to corporates. The Reserve Bank of India placed the bank under the Prompt Corrective Action in September 2019 because of its weak health.