MUMBAI:Lakshmi Vilas Bank, which badly needs capital to meet regulatory requirements, has got board approval to raise up to Rs 500 crore through a rights issue.

The private bank's capital adequacy ratio (CAR) as per Basel III guidelines shrank to 0.17 % as on 30 June, as against a regulatory minimum of 10.875%. The bank had reported a net loss of ₹ 112.28 crore for the June quarter compared to a loss of ₹ 237.25 crore a year ago.

Lakshmi Vilas Bank, whose shareholders recently voted against the appointment of seven directors to its board, is in merger talks with the Clix Group. On 8 October, the bank said that it had received an indicative non-binding offer from Clix Group.

The Reserve Bank of India (RBI) has put Lakshmi Vilas Bank under prompt corrective action (PCA) since September 2019. The bank, thus, cannot indulge in high-risk lending and has to set aside more money on provisions. There are also restrictions on management salary.

The seven directors who were targeted by the shareholders include S Sundar, the managing director and chief executive officer of the bank, non-executive and non-independent directors N Saiprasad, K R Pradeep and Raghuraj Gujjar and non-executive and independent directors B.K. Manjunath, Gorinka Jaganmohan Rao and Y.N. Lakshminarayana Murthy. They were unhappy about the bank's rising non-performing assets (NPAs) and bad management. These appointments were taken up for voting at the bank's annual general meeting (AGM) on 25 September.

Some of the major shareholders are India Opportunities Growth Fund Ltd - Pinewood Strategy (3.74%), Aviator Emerging Market Fund (2.49%), JM Financial Services Ltd (3.88%), Srei Infrastructure Finance Ltd (3.34%) and Indiabulls Housing Finance Ltd (4.99%).