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IDBI Trusteeship sends one other attraction to RBI, requests to compensate LVB bondholders

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MUMBAI: IDBI Trusteeship Services has despatched one more attraction to the Reserve Bank of India requesting compensation for tier 2 bond holders of Lakshmi Vilas Bank. The trusteeship which manages a big portion of bonds which were subscribed by retail traders has appealed to the RBI to rethink its resolution to write-off tier 2 bonds value Rs 318 crore.

The IDBI trustee companies in its letter to the RBI has additionally said that bond holders have been requesting to both present for paying-off their bonds or transferring it to DBS Bank as per the servicing schedule.

“We once again respectfully request Reserve Bank of India to urgently reconsider this matter and direct or allow the LVB/DBS Bank India Limited (after amalgamation) to make payments to the bond holders of Rs. 318.20 crore,” IDBI Trustee has written in its letter.

The trustee companies has additionally claimed that since 902 out of whole 1064 bond holders are small and senior citizen retail bond holders, they’ve been adversely affected by the write-off of Basel-III grievance tier-2 Bonds earlier than the merger of Lakshmi Vilas Bank into DBS Bank of India.

“Bond holders have been agitated about losing their hard earned money invested in these bonds and writing to us that if these bonds are written off they would be put to unbearable loss,” the letter that ET has seen states. “Most of the bond holders have stated that they have invested their life savings into these bonds.”

The 94-year-old LVB wrote down Basel III-compliant tier 2 bonds value Rs 320 crore on November 26, only a day earlier than its amalgamation with DBS Bank India. It was completed on RBI’s directions. LVB ceased to exist from November 27, with all of its branches working as DBS Bank.

LVB had tier II bonds value Rs 370 crore on its books whereas bonds value Rs 320 crore had the loss-absorption function below Basel III capital construction. These bonds, issued between March 2014 and June 2017 and maturing between March 2024 and September 2025, carried excessive coupon charges of 10.70-11.80 per cent.

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