The Competition Commission of India (CCI) has approved the merger between Indiabulls Housing Finance and Lakshmi Vilas Bank. The scheme of amalgamation is subject to approvals from other regulators and authorities, though.
In identical stock exchange filings, Indiabulls Housing Finance and Lakshmi Vilas Bank informed that the CCI, at its meeting held on June 20, 2019, has approved the proposed combination of the two companies.
In April this year, the board of Lakshmi Vilas Bank announced its merger with Indiabulls Housing Finance in a share-swap deal. As per the merger proposal approved by the shareholders, the bank will get 14 shares of Indiabulls Housing Finance for every 100 shares they hold.
The merged entity will be amongst the top eight private banks in India by size and profitability, with a net worth of Rs 19,472 crore, a loan book of Rs 1.23 lakh crore, and a combined workforce of 14,302 employees. Its Capital Adequacy Ratio, the ratio of a bank's capital to its risk, will be 20.6 per cent. In terms of asset quality, the new entity will have 3.5 per cent Gross NPA and 2 per cent Net NPA.
The merger is aimed at creating a combined entity with a larger capital base and wider geographical reach. Indiabulls Housing Finance's access to large northern and western markets in India will work in tandem with the Lakshmi Vilas Bank's heavy presence in southern India to create a pan-nation presence. With the merger, Indiabulls Housing Finance will get access to stable low-cost funding in the form of public deposits and expanded distribution franchise. The amalgamation will also help Indiabulls Housing Finance explore cross-selling opportunities.