Moreover, the Clix issue has not been included in the agenda for the board meeting.
The board of the troubled Lakshmi Vilas Bank (LVB) is unlikely to take up the Clix deal at its Saturday meeting, being convened primarily to approve the bank’s second quarter results.
Sources privy to the development told FE that deliberations on the deal had not reached any conclusion that could be presented before the board for approval. Moreover, the Clix issue has not been included in the agenda for the board meeting.
Sources said there were too many stumbling blocks to be cleared before both the parties could arrive at a consensus on the deal. The two-member LVB panel and Clix representatives had been engaged in repeated discussions after the bank received an indicative non-binding offer from the Clix Group on October 8. But, according to sources, they are yet to wrap up the negotiations.
The Clix team had reportedly indulged in hard bargaining over the contours of the deal to lower the valuations, sources said. Moreover, Clix wanted LVB to make full provisions against contingent liability of Rs 720 crore related to transactions involving former Religare promoters Malvinder and Shivinder Singh, pointing out that bank would have to return the money if it loses the case against RFL.
LVB, on the other hand, countered it, pointing out that that there was no need to maintain full provisions. The bank management had apparently told Clix that they could examine the accounts which had gone through forensic audit.
The board of cash-starved LVB had on October 15 approved raising Rs 500 crore through a rights issue. The bank is in the process of readying papers to file in November. The merchant banker was on the job and decided on the ratio and the amount soon, sources said.
LVB, which had been placed under RBI’s prompt corrective action since 2019, had posted a net loss of Rs 112.28 crore for Q1FY21 as compared to net loss of Rs 237.25 crore in Q1FY20. The gross NPA was at 25.4% in Q1 while net NPA stood at 9.64% with provision coverage ratio of 72.58%. LVB had a capital adequacy ratio of just 1.12% as on March 31 against the RBI requirement of 8%. The lender’s Tier-I and -II components of CAR stood at negative 0.88% and 2%, respectively.
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