TBM Staff - Mumbai
The Madras High Court has instructed the Reserve Bank of India (RBI) to conduct a thorough assessment of the shares and assets of DBS Bank India and Lakshmi Vilas Bank (LVB) prior to their amalgamation in November 2020. This evaluation aims to shed light on how the merger impacted stakeholders.
Once this fresh valuation is completed, the RBI is anticipated to review its decision regarding the reduction of share value and the write-off of tier-2 bonds within four months.
This legal action stems from a lawsuit filed by bondholders and minority shareholders of LVB, contesting the devaluation of their investments. Their grievance originated from the moratorium imposed on LVB before its amalgamation with DBS Bank India.
Importantly, the court’s ruling does not question the decision to merge but rather acknowledges the concerns raised by investors, especially bondholders who are akin to depositors. The court stressed that any review of the RBI’s decision should take into account the grievances of shareholders and bondholders and aim to alleviate any hardships caused by the mandatory amalgamation.
This directive comes after extensive hearings on the merger cases, which were consolidated and transferred to the Madras High Court from various High Courts across India in 2022.
Seen as a significant move, the court’s directive signifies a step towards addressing the concerns of stakeholders affected by the merger. It underscores the importance of a transparent and fair valuation process to ensure equitable treatment of all involved parties.
