Why RBI has rejected the merger of Laxmi Vilas Bank and Indiabulls?
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The Reserve Bank of India (RBI) thumbs down to the proposed merger between Lakshmi Vilas Bank and Indiabulls Housing Finance Ltd. (non-bank lender) on 09th October 2019.
Why did RBI rejected the proposal? As per RBI, Lakshmi Vilas Bank holds its place under prompt corrective action (PCA). The bank has defaulted in huge loans, lack in capital adequacy ratio, negative return on assets (RoA) for two consecutive years and high leverage.
RBI has asked the bank to focus on building the bank's finance structure at a good state through repayment on loan and avoid opening new branches until further notice of the centre.
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