Lakshmi Vilas Bank needs up to ₹2,000 cr. to stay afloat: CEO
Third quarter results kindle hope of raising funds, he saysby N Anand
Funds-starved Lakshmi Vilas Bank Ltd. (LVB) requires up to ₹2,000 crore to keep itself afloat, said a top executive of the bank.
“We require about ₹1,500 crore to ₹2,000 crore to improve our loan book and operations,” S. Sundar, interim managing director and CEO, Lakshmi Vilas Bank, said. “We hope we can raise the funds as we have started showing progress in our third quarter results.”
According to him, one-third of the amount would be required for working capital, provisioning and for lending. “With ₹700 crore, we can easily build our loan book to ₹7,500 crore and improve our performance. With the available funds, we can carry on for two to three years,” he said.
Mr. Sundar replied in the negative when asked if they have had any discussions with prospective investors.
On Friday, LVB constituted a team of experts, which includes Mr. Sundar, a promoter head, and non-executive director K.R. Pradeep, discuss with potential strategic investors on funds and to explore ways to bail it out.
Q3 loss narrows
Meanwhile, LVB’s net loss for the third quarter ended December 2019 narrowed to ₹334.48 crore from ₹373.49 crore a year earlier, on lower provisions. Cash recovery was ₹266 crore and fresh slippages was ₹256 crore.
During the quarter, LVB reported a net interest income of ₹125.91 crore against ₹138.79 crore. The provision coverage ratio rose to 68.70% (55.93%). Net interest margin improved to 1.97% from 1.65%.
The gross non-performing assets (NPA) of the bank increased to 23.27% from 13.95%, whereas net NPAs jumped to 9.81% from 7.64%. “We expect to recover at least ₹1,800 crore,” Mr. Sundar said.