Rumors were circulating in the market that Lakshmi Vilas Bank, another bank, was ready to go bankrupt at any moment. The 94-year-old bank has been running smoothly for 80 years.
The bank's turmoil began in the last decade. The bank has changed its CEO five times in ten years. No CEO lasted more than two or three years. The second biggest problem was that the bank had approved more loans than its capacity. The bank has given loans to many medium-sized companies. Even if some of these companies went bankrupt, it would pose a serious problem for the bank.
The bank has invested about one-sixth of the capital of private bank HDFC in the areas of power, real estate, infrastructure, construction, etc. There was no guarantee that the loan would be repaid. Yes, Bank had earlier made such a mistake. However, Lakshmi Vilas Bank made the same mistake. In fact, there was a boom in all these sectors between 2007 and 2010. Meanwhile, the CEO, VS Reddy, had passed a large loan.
Most of these areas collapsed during the recent Corona and Lockdown. So now the possibility of repaying the loan given by the bank was one hundred percent. The possibility of Lakshmi Vilas Bank going bankrupt at any time is not ruled out.
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