RBI turns down Indiabulls Housing’s merger with Lakshmi Vilas Bank

The Reserve Bank of India (RBI) has rejected the planned merger between Indiabulls Housing Finance and Lakshmi Vilas Bank after examining the proposal for more than six months, during which multiple approaches were considered to ensure compliance with strict banking sector takeover rules.

“This is to inform that RBI, vide its letter dated October 9, informed that the application for voluntary amalgamation of lndiabulls Housing Finance Limited and lndiabulls Commercial Credit Limited with Lakshmi Vilas Bank cannot be approved,” the private sector lender said in a late evening regulatory filing on Wednesday.

Gagan Banga, Indiabulls Housing Finance (IHF) vice chairman, said it appears that the RBI saw the move as a backdoor entry into banking. “They (RBI) have not gone ahead and approved the deal because they saw it as an NBFC taking over a bank. That is the feedback we are getting. The message is very clear that if you want a bank, do it in a straightforward manner,” said Banga.

“We will get back to growth from tomorrow morning as housing finance company,” he said. “We have done liability correction by getting rid of short-term liabilities. Our businesses were on hold because of the uncertainty over the last six months. We had shrunk balance sheet by 20%. We will get back to growth.” #casansaar (Source - PTI, Economic Times)