The Economic Times daily newspaper is available online now.

    RBI rejects Indiabulls Housing, Lakshmi Vilas Bank’s proposed merger

    Synopsis

    Ajit Mittal, ED, Indiabulls Group says he doesn't see any negative reaction from investors.

    RBI rejects proposed Lakshmi Vilas Bank-Indiabulls merger
    The Reserve Bank of India has rejected the proposed merger between Lakshmi Vilas Bank and Indiabulls Housing Finance, the lender said on Wednesday. The bank didn’t reveal the reason cited for the central bank’s decision.

    The rejection comes after RBI last month put LVB under the Prompt Corrective Action (PCA) framework due to a high level of bad loans, lack of sufficient capital to manage risks and negative returns on assets for two consecutive years.

    The move had come after Delhi Police's Economic Offences Wing registered a complaint against the board of LVB, alleging cheating and misappropriation of funds.

    Analysts had earlier said the regulatory action might cast doubts over the proposed merger.

    “RBI informed that the application for voluntary amalgamation of lndiabulls Housing Finance and lndiabulls Commercial Credit with Lakshmi Vilas Bank cannot be approved,” the Chennai-based private sector lender said in a regulatory filing on Wednesday.
    « Back to recommendation stories
    I don't want to see these stories because
    SUBMIT

    The companies had announced the merger in April and sought approval from RBI on May 7.

    Talking to ET lNOW on RBI’s decision, Ajit Kumar Mittal, ED, Indiabulls Group, said he didn’t expect any negative reaction from investors to the decision.

    “We are okay with RBI’s decision. Nothing changes for Indiabulls. Our business has withstood the test of time and the company is very well capitalised and robust,” he added.

    According to Mittal, Indiabulls had become a target of various attacks during the merger process.

    In a separate filing, Indiabulls Housing Finance said the board of the company would consider a share buyback proposal on October 14.

    The Ministry of Corporate Affairs has been investigating three Indiabulls Group companies for about a year and will submit its final report by the end of October, Bloomberg had reported earlier this month quoting sources.

    Shares of NBFC rose 2.34 per cent or Rs 5.50 to Rs 240.30 on Wednesday, while those of Lakshmi Vilas Bank hit the lower circuit limit, after falling 4.93 per cent or Rs 1.40 to Rs 27 on BSE.

    "Everyone was expecting it won’t go through," said Pritesh Bumb, Research Analyst at Prabhudas Lilladher.

    "The criteria of fit and proper was questionable for both parties. There would be a concrete reasons for RBI to reject it, which is not there is the public domain as yet," added Bumb.



    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more


    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
    The Economic Times

    Stories you might be interested in