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Indiabulls Housing Finance (IBH) on Monday sought to assuage concerns over its proposed merger with Lakshmi Vilas Bank (LVB) by saying that the deal should be completed by the end of the current fiscal.
Top executives of Indiabulls said, during an analyst call, that the decision by the RBI to place LVB under prompt corrective action due to high non-performing assets, insufficient capital makes the case for a merger stronger. “We expect the merger to go through as per the earlier timeline. We should hear from the RBI in the next month or two,” Indiabulls said.
Indiabulls’ shares tanked over 38 per cent on Monday on fears that the proposed merger with LVB could face a setback as the central bank initiated corrective actions against the latter.
The stock closed 34 per cent down on Monday on the BSE.
The RBI has put LVB under prompt corrective action framework due to high bad loans and insufficient capital. The bank also downplayed the impact of the the action. “We wish to reassure all customers that bank can transact normal business. There are no restrictions on operations by depositors,” it stressed, adding that the bank can also undertake lending activities to all segments except corporates and other stressed and high risk sectors.
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