LVB employees have been told their jobs are safe for up to three years in the amalgamated bank
Stakeholders of Lakshmi Vilas Bank
(LVB), now placed under moratorium and proposed to be merged with DBS Bank
India (a subsidiary of Singapore-based DBS Bank), furnished their suggestions and objections to the Reserve Bank of India (RBI) on Friday, the cut-off date set by the regulator.
Shareholders have requested the RBI
to reconsider its decision on delisting LVB’s shares from the stock exchanges. “With over 20 per cent retail investor participation, it would be in the best interest of all shareholders if we are able to get some value for our shares,” said an investor.
However, some large institutional investors have indicated that they may not challenge the decision, even if RBI
decides otherwise. Once the RBI
invokes Section 45 of the Banking Regulation Act, 1949, it supersedes all other laws that would otherwise have been applicable.
Employees of LVB have been given an assurance that their jobs are secure for about three years in the amalgamated bank. However, that hasn’t been enough to convince them of the merger.
“The employees’ association has also recommended in favour of amalgamating with a public sector bank, akin to the stand taken by the bank’s union,” said a person aware of the development.
The proposed terms of amalgamation state that employees of LVB will be absorbed into the merged bank on the current terms of their employment. While LVB need not remunerate its employees based on the salary structure mandated by Indian Banks’ Association (IBA), given its recent exit from the industry body, they had foregone salary increments for the past two years.
Fearing that salary arrears may not accrue to them upon merger with a foreign bank, employees have expressed their objection to the merger with DBS Bank
India. Earlier, the All India Bank Officers’ Confederation (AIBOC) had also said it was not in favour of DBS Bank
India acquiring the Tamil Nadu-based bank.
The RBI is expected to finalise the terms of the merger early next week. LVB was placed under moratorium for a month on Tuesday. A cap of Rs 25,000 has been imposed on withdrawal of deposits till December 16.