Lakshmi Vilas Bank bets on gold biz, MSMEs for business revival!

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Read all details: Lakshmi Vilas Bank bets on gold biz, MSMEs for business revival!

Lakshmi Vilas Bank NSE 4.90% (LVB) is adopting a strategy to conserve the capital it will have ahead of the financial year-end. This is even as the capital-starved lender is continuing its search for new investors.

Lakshmi Vilas Bank bets on gold biz, MSMEs for business revival

The bank is focusing on zero-risk gold loan business that requires no capital to be set aside. The micro, small and medium enterprises (MSME) sector remains another focus area even though it has stopped corporate lending.

The top layer of LVB has been made thinner as it asked some of its senior executives to go. The Chennai-based lender has also returned back to branch-intensive banking for greater customer response. It also asked its sales team and relationship managers to report to branch heads instead of their vertical heads.

The lender is ready to give control to new investors as it desperately looks to raise $250 to $300 million to augment capital. Moreover, to boost the adequacy ratio from a poor 3.46% against the regulatory minimum of 9%.

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Its gross NPA came down marginally. In absolute terms, it came down at Rs. 4081 crores from Rs 4091 crore in 3 months. However, the NPA ratio rose from 21.25% to 23.27%. Sundar said that this was because the loan book had shrunk.

LVB had Rs 17,500 crore of loans outstanding at the end of December 2019 as against Rs 27,000 crore in March 2018 around when the financials started turning bad as its stopped lending to corporates.

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