DBS India to Save Troubled Lakshmi Vilas Bank

1 min readUpdated Jun 4, 2025Nov 19, 202011:03 PM

In this article (4)

The Chennai-based bank, which has a 94-year history in India, with established retail and SME customer base, and a strong presence in South India, has undergone a steady decline with the bank incurring continuous losses over the last three years, eroding its net-worth.

India’s banking regulator imposed a 30-day moratorium Tuesday on struggling Lakshmi Vilas Bank (LVB), superseded its board of directors and announced a draft scheme for the amalgamation of the bank with DBS Bank’s India subsidiary.

The financial position of Lakshmi Vilas Bank has undergone a steady decline with the bank incurring continuous losses over the last three years, eroding its net-worth. In the absence of any viable strategic plan, declining advances and mounting non-performing assets (NPAs), the losses are expected to continue,» the Reserve Bank of India (RBI) said.

To support the amalgamation, DBS will inject INR 2,500 crore ($345 million) into DBIL if the scheme is approved. This will be fully funded from DBS’ existing resources, the bank said.

The proposed amalgamation will provide stability and better prospects to Lakshmi Vilas Bank’s depositors, customers, and employees following a time of uncertainty. At the same time, the proposed amalgamation will allow DBIL to scale its customer base and network, particularly in South India, which has longstanding and close business ties with Singapore, DBS said in a statement on Wednesday.

DBS has been in India since 1994. To expand the franchise and build greater scale, DBS converted its India operations to a wholly-owned subsidiary in 2019, DBIL. The bank is now present in 24 cities across 13 states.

AdvertisementAdvertise with usMobile 320×100

What this means

This forced amalgamation represents a pragmatic, if not opportunistic, move for DBS India. While absorbing a troubled entity carries inherent risks, the regulatory-backed merger provides immediate scale, particularly in South India where DBS has sought deeper ties. Unlike other market entries focused on new infrastructure like Microsoft's cloud region in Hyderabad, this move directly acquires an existing, if distressed, customer base and physical network. It pressures rivals by rapidly expanding DBS's direct presence without the slower organic growth path. The primary challenge will be retaining the acquired depositors and SMEs post-merger, ensuring the ₹2,500 crore injection yields profitable integration. DBS must now demonstrate smooth operational consolidation to justify the acquisition, with initial customer sentiment being key.

Wei Zhang · Retail News Asia newsroom

Questions & Answers

What led to the RBI imposing a moratorium on Lakshmi Vilas Bank?

The bank had suffered continuous losses for the last three years, which eroded its net-worth. This decline, combined with a lack of a viable strategic plan and mounting non-performing assets, led to the RBI's intervention.

How will DBS Bank support the proposed amalgamation?

DBS will inject INR 2,500 crore ($345 million) into its India subsidiary, DBIL, to support the amalgamation. This funding will come entirely from DBS's existing resources.

What benefits does DBS expect from acquiring Lakshmi Vilas Bank?

The proposed amalgamation will allow DBIL to expand its customer base and network, especially in South India. This region has strong business connections with Singapore, which aligns with DBS's strategic interests.

Reader pulse

Was this a smart move for DBS?

23,987 votes so far