RBI rejected proposal of merger of Lakshmi Vilas Bank with Indiabulls housing finance

Laskshmi Vilas bank announced that the Central bank has not given any approval on its mereger with Indiabulls finance limited.

The Lakshmi Vilas Bank (LVB) said in a stock exchange filing, “This is to inform that RBI vide their letter dated October 09, 2019, informed that the application for voluntary amalgamation of lndiabulls Housing Finance Ltd and lndiabulls Commercial Credit Ltd with Lakshmi Vilas Bank Ltd cannot be approved.”

In the month of April, The Lakshmi Vilas Bank Ltd had informed the exchanges that it will soon be merged with the financier Indiabulls Housing Finance Ltd. This merger was approved by the board of the Lakshmi Vilas Bank.

As the crisis in the banking sector is coming, the Lakshmi Vilas bank ltd. and the Indiabulls, both were trying to boost their capital and profits with this merger.

The bank had asked for approval from the Reserve Bank of India (RBI) on 7 May, 2019. This merger is important for the lenders Indiabulls as they are planning to diversify their assets.

On the other side Lakshmi Vilas Bank wants to increase their capital to repay loans. Indiabulls’ dollar bonds and shares plunged after the Delhi High Court admitted a petition against the shadow lender and the Reserve Bank of India placed restrictions on the Lakshmi Vilas Bank, as per the Bloomberg.