To protect investors' interest, the RBI can adopt an open offer route as per Securities and Exchange Board of India's (Sebi) norms for delisting. "The RBI could have dealt with LVB in an open manner rather than deciding to hand it over free of cost to DBS Bank
India," he said
“Without a depositors run on the bank, no risk of increased lending and the bank facing no crisis, the RBI need not have decided to give the LVB free of cost to DBS Bank India, a wholly-owned subsidiary of DBS Bank Ltd, Singapore without any bidding raises several questions,” Pradeep said.
The RBI can appoint reputed experts for valuating LVB; offer an opportunity for introducing capital or merger, or invite industrial houses to make an offer for the lender, he said, referring to the attempts to salvage beleaguered housing finance
company Dewan Housing Finance
LVB's net worth is positive; its provision coverage is about 80 per cent and the capital erosion is due to provisions and liquidity coverage is one of the best in the industry.
“In 1-3 years when the loans are recovered then these provisions will be reversed. When that happens it is DBS Bank India which would unduly benefit,” said Pradeep adding that nearly 50 per cent of the Rs 3,500 crore provisions will be reversed in a couple of years.
"The assets of the borrowers taken over by LVB have realisable monetary value. This seems to be not taken into account by RBI, Pradeep said. The Clermont Group had offered $300 million for 60 per cent stake in LVB in March 2020 and reiterated it in July 2020. Nobody offered to pay zero money to take over LVB."