Lakshmi Vilas Bank's sustenance depends on improving liquidity

Lakshmi Vilas Bank's sustenance as a going concern is dependent on its ability to improve liquidity, asset quality and capital base, according to the auditors of the bank.

In the bank's July-September earnings, the auditors said that as per the opinion of the bank, based on their internal assessment and the likely capital infusion, the lender will be able to realise its assets and discharge its liabilities in its normal course of business and hence the financial results have been prepared on a going concern basis.

"The said assumption of going concern is dependent upon the bank's ability to achieve improvements in liquidity, asset quality and solvency  ratios, augment its capital base and mitigate the impact of Covid-19 and thus a material uncertainty exists that may cast a significant doubt on the Bank's ability to continue as a going concern," they said as per the bank's regulatory filing.

"However, the bank opines that there are mitigating factors to such uncertainties," it said.

During the quarter ended September, the banks reported a net loss of Rs 397 crore, compared to Rs 357 crore during the same period last fiscal.

The banks saw a marginal improvement in its asset quality. Gross non-performing asset (GNPA) ratio stood at 24.45 per cent as of September compared with 25.4 per cent as of June. Net NPA ratio improved to 7 per cent from 9.64 per cent in the previous quarter.