Lakshmi Vilas Bank plunges 9% post Q2 loss; auditor says bank needs urgent capital infusion

NEW DELHI: Shares of Lakshmi Vilas Bank (LVB) fell 9 per cent in Monday's trade after the bank's auditor said urgent steps are needed to augment the lender's capital base in the FY21.

The comment came as the private lender reported a net loss of Rs 397 crore for September quarter compared with a loss of Rs 357 crore in the year-ago quarter.

Following the development, the stock fell 8.65 per cent to hit a low of Rs 14.25 on BSE.

"In the opinion of the bank, this bank will be able to realise its assets and discharge its liabilities in its normal course of business and hence the financial results have been prepared on a going concern basis. The said assumption of going concern is dependent upon the bank's ability to achieve improvements in liquidity, asset quality and solvency ratios, augment its capital base and mitigate the impact of Covid-19 and thus a material uncertainty exists that may cast a significant doubt on the Bank's ability to continue as a going concern," LVB auditor P Chandrasekar LLP said.

In its quarterly results, the bank said it has made significant progress with Clix group for the proposed amalgamation of Clix Capital Service and Clix Finance India into the bank.

"There was minor incremental due diligence requested by Clix Group, which was completed this week. Now, the respective sides are in the process of a workable and mutually acceptable framework," it said.

Besides, the bank's board has already approved the rights issue worth Rs 500 crore and has appointed ICICI Securities as the merchant banker for the same.