The central government on Tuesday placed the Lakshmi Vilas Bank under moratorium with effect from 17th November 2020 to 16th December 2020.
The order by the government came after an application for this was made by the Reserve Bank of India (RBI).
During the period of the moratorium, depositors will not be permitted to withdraw a sum exceeding Rs 25,000.
Upon receiving special orders from the RBI, the bank may pay more than the said amount in case of medical treatment, education, marriage related expenses and unavoidable emergencies.
Earlier, in September, shareholders of the cash-strapped private sector lender had voted out seven board members, including MD & CEO S Sundar, at the annual general meeting.
Subsequently, the RBI appointed a three-member Committee of Directors (CoD) comprising independent directors Meeta Makhan, Shakti Sinha and Satish Kumar Kalra.
In June 2020, LVB inked a non-binding agreement with Gurgaon-based non-banking Clix Group for amalgamation. But then Clix Capital's founder Pramod Bhasin found the pace of progress of the merger talks to be too slow and threatened to walk away.
(With PTI inputs)