Clix Capital may seek indemnity from LVB’S dues

An estimated exposure of ~700-900 crore likely to come under regulatory scrutiny

Clix Capital and its affiliates, in talks with beleaguered Lakshmi Vilas Bank (LVB) for an amalgamation, may seek some regulatory dispensations for the deal to crystalise.

Highly placed sources told Business Standard that Clix Capital might insist that its directors are indemnified from any future claims made against the bank pertaining to its lending operations.

It is estimated that ~700-900 crore worth of liabilities may hit the bank.

The condition is being insisted upon after two of LVB’S former employees were arrested by the Economic Offences Wing (EOW) on September 25 in connection with the misappropriation of ~729 crore of fixed deposits pertaining to Religare Finvest Ltd.

“Under the current circumstances, getting immunity from LVB’S past lending activities is critical for the deal to go through,” said a person involved in the matter.

When contacted, a spokesperson for Clix Capital refrained from offering any comment, while an email to LVB remained unanswered till the time of going to press.

Clix Capital, founded by Pramod Bhasin and Anil Chawla, is 85 per cent owned by Aion Capital Partners, a Mumbai-based private equity firm. It is being advised by EY on the merger, while Deloitte has the mandate from LVB. Veteran banker Romesh Sobti is also an advisor to Clix Capital.

On Friday, seven of the 13 directors of LVB, including its interim CEO, were voted out of the board by shareholders.

The bank’s day-to-day operations are now being overseen by its independent directors — Shakti Sinha, Meeta Makhan and Satish Kumar Kalra, who form part of the committee of directors.

The bank was placed under the prompt corrective action (PCA) framework by the Reserve Bank of India (RBI) in September 2019, and subsequently its merger with Indiabulls Housing failed to get regulatory nod. With strained capital position, 10 successive quarters of losses, and gross NPA ratio mounting to 25.4 per cent in the June FY21 quarter, LVB has since been on a hunt for capital.