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Indiabulls HFC, Lakshmi Vilas Bank face separate probes over fraud allegations

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Indiabulls HFC, Lakshmi Vilas Bank face separate probes over fraud allegations

Indian authorities are set to open separate probes into allegations of fraud and misappropriation against Indiabulls Housing Finance Ltd. and Lakshmi Vilas Bank Ltd., which are seeking approval to merge, Bloomberg News reported Sept. 27.

The Delhi High Court agreed to hear a petition that alleges Indiabulls Housing Finance provided billions of rupees worth of loans to shell companies, according to a Sept. 27 stock exchange filing. Separately, the Delhi Police's Economic Offences Wing registered a complaint against the board of Lakshmi Vilas Bank over allegations of cheating and misappropriation.

The report came after India's central bank initiated a prompt corrective action against Lakshmi Vilas Bank. The two companies are also facing increased regulatory scrutiny following allegations of wrongdoings against the housing finance company's promoters and the sudden departure of the bank's CEO.