After a lot of scrutiny, Reserve Bank of India (RBI) finally rejected the proposed merger between Chennai-based Lakshmi Vilas Bank (LVB) and Gurugram-based Indiabulls Housing Finance Limited (IBHFL). The proposed merger plan was crucial for Lakshmi Vilas Bank as it would have helped it raise capital, which is required to lift the PCA restrictions currently imposed on it by the central bank.

Indiabulls Housing Finance Ltd said in a statement that it will do a buyback of equity shares of the company, for which it has called a board meeting on October 14. In June this year, the Competition Commission of India (CCI) had given its nod to the proposed amalgamation.

In fact, RBI had placed Lakshmi Vilas Bank under prompt corrective action (PCA) due to a high level of non-performing assets of the bank. IBHFL and LVB had proposed a merger between the two in April in a share-swap deal under which LVB shareholders would get 14 shares of IBHFL for every 100 equity shares held in the bank.

Failed merger deal

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