Explained: What justified the delisting of Lakshmi Vilas Bank's shares

At Rs 8 a share, LVB stock price has almost halved since the merger announcement

The Reserve Bank of India’s (RBI’s) stand to delist the shares of beleaguered Lakshmi Vilas Bank (LVB) has invoked negative responses from many sections. The key losers are shareholders or investors, as the stock has been locked in the lower circuit for the fourth consecutive day. From Rs 15.7 per share last Tuesday, the stock has halved to Rs 8.10 now.

While investors’ angst is understandable, one needs to understand the possible logic behind such a move. Sample this, from -0.88 per cent tier-1 capital as on March 31, it plunged to -4.85 per cent by September 30. Hence, even a