The Reserve Bank of India rejected the proposed merger between Lakshmi Vilas Bank Ltd. and Indiabulls Housing Finance Ltd.
The central bank informed the companies in an Oct. 9 letter that the application for a merger of Indiabulls Housing Finance and Indiabulls Commercial Credit Ltd. with Lakshmi Vilas Bank cannot be approved. The banks did not disclose the reasons as to why the RBI rejected the proposal.
Indiabulls Housing Finance said in a separate statement that it will now focus on the growth of its core business. The company is also considering a buyback of its shares, subject to board approval.
The RBI rejection comes after Lakshmi Vilas Bank and Indiabulls Housing Finance reportedly came under increased scrutiny from the central bank following allegations of wrongdoings against the housing finance company's promoters.
The regulator reportedly intensified its "fit and proper" checks on the companies after a lawsuit was filed in the Delhi High Court to ask for a special probe into alleged irregularities, including diversion of funds, committed by the promoters of Indiabulls Housing Finance.
