Shares of Indiabulls Housing and Lakshmi Vilas Bank tanked in morning trade on Thursday after RBI rejected the first of its kind attempt by an NBFC company to merge with a bank.
Indiabulls Housing tumbled as much as 8.2% to Rs. 220.45 apiece on the BSE, while the private hit a 5% lower circuit at Rs. 25.65.
The merger announcement which came in on April 2018 had received all of the necessary approval but was yet to get a go-ahead from the RBI. It is to be noted that Lakshmi Vilas Bank a few days ago was put in the PCA framework by the apex banking authority citing reasons such as inadequate capital levels, negative return on assets, high leverage etc.
"Now that the merger will not happen with Lakshmi Vilas bank, the uncertainty of last 5 months on the business is lifted and the company will focus on its growth of the core business of housing finance," Indiabulls said.
On October 14, Indiabulls Housing Finance has called a board meeting to consider buy-back of equity shares.