NEW DELHI: The umbrella body of bank unions AIBEA on Tuesday said it was demanding a timely action from the RBI on Lakshmi Vilas Bank (LVB) as the regulator was aware about its financial condition for the last three years and said its demand for a merger with a public sector bank has not been accepted.For the past three years and more, the Tamil Nadu-based private sector Lakshmi Vilas Bank has not been in good health, rather, it was suffering from bad health and continuous loss, it said.The reason is well known to all including the RBI, the All India Bank Employees’ Association (AIBEA) said in a release.The cash-strapped lender was put under moratorium with immediate effect through a late evening directive from the RBI and has been proposed to be merged with foreign-based DBS Bank.The AIBEA said that RBI’s inaction has resulted into moratorium on LVB and demanded a thorough probe into the culpability of the RBI. It said that the RBI should take action on those LVB officials who mismanaged the lender.”AIBEA demands the government to merge LVB with a public sector bank. From AIBEA we have been demanding timely action by RBI on the deteriorating health of LVB and LVB to be merged with a public sector bank. Such a pro-active action was not taken. Now this announcement has come as a shock to the bank customers and general public,” AIBEA Secretary General C H Venkatachalam said.It said that this will create panic and doubt in the minds of people about the stability and dependability of banks because people keep their hard earned savings in the banks.”RBI, which is responsible to maintain the stability of the banks and financial sector, cannot escape its responsibility for not taking timely action. RBI’s role should be thoroughly probed. Moreover, some top management officials of LVB are responsible for the huge bad loans in the bank and action should be taken on them,” he added.The then management of the bank had indulged in a lot of bad loans of more than Rs 2,000 crore to borrowers like Religare, Jet Airways, Cox and Kings, Nirav Modi group, Coffee Day, Reliance Housing Finance, etc.”All these undesirable loans were known to RBI as it had its nominee as director on the board of the bank. The bank was put of PCA norms indicating that the bank needs correction. But unfortunately a very long rope has been given to the bank and today, the RBI has announced moratorium,” the AIBEA further said.As per the government order, Lakshmi Vilas Bank has been placed under a one-month moratorium and its board has been superseded, while a cap of Rs 25,000 per depositor has been imposed on withdrawals.The step was taken by the government, on the advice of the Reserve Bank, in view of the declining financial health of the private sector lender.Bank’s net NPAs or bad loans stood at 7.01 per cent of the net loans at end of September 2020, as against 10.24 per cent as on March 31, 2020 and 10.47 per cent as of September 2019.While gross NPAs were at 24.45 per cent of the gross advances as against 25.39 per cent at March-end and 21.25 per cent by the end of September a year ago.The capital adequacy ratio was at a (-)2.85 per cent as of September 2020 as against 1.12 per cent by end of March this year.