The Reserve Bank of India (RBI) has rejected the proposal of the merger between the Lakshmi Vilas Bank and Indiabulls Housing Finance Limited.
The private sector lender said in a regulatory filing that, “This is to inform that RBI vides their letter dated October 09, 2019, informed that the application for voluntary amalgamation of lndiabulls Housing Finance Limited and lndiabulls Commercial Credit Limited with The Lakshmi Vilas Bank (LVB)Limited cannot be approved.” The announcement was made on late Wednesday.
Due to high net Non-performing Assets, insufficient Capital to Risk (Weighted) Assets Ratio (CRAR) and CET 1, negative RoA for two consecutive years and high leverage, the apex bank has recently put the Lakshmi Vilas Bank under the Prompt Correction Action Framework.
This year in April, Lakshmi Vilas Bank’s board had given clearance for the merger through a share swap deal with Indiabulls Housing Finance.
The merger was expected to give larger presence to Lakshmi Vilas Bank and also low-cost stable funds to Indiabulls.
On May 7 the bank had asked RBI for its approval for the merger. It was cleared by the Competition Commission of India.
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