Lakshmi Vilas Bank was locked in 5% lower circuit at Rs 25.65 after the Reserve Bank of India rejected the proposed merger of Laskhmi Vilas Bank and Indiabulls Housing Finance.
Meanwhile, Indiabulls Housing Finance was down 11.40% to Rs 212.90.
In April 2019, Lakshmi Vilas Bank (LVB) had announced the plan of amalgamating Indiabulls Housing Finance and Indiabulls Commercial Credit with LVB. Later, the bank had sought RBI's approval on 7 May 2019 for the proposed amalgamation.
The RBI, in its letter dated 9 October 2019, informed that the voluntary amalgamation of Indiabulls Housing Finance and Indiabulls Commercial Credit with The Lakshmi Vilas Bank cannot be approved.
In a separate announcement on 9 October 2019, the bank said that the credit rating agency, Brickwork Ratings India, has revised its rating from 'BWR BBB-' (credit watch with developing implications) to 'BWR BB+' (credit watch with developing implications) for the bank's unsecured redeemable non-convertible subordinated lower tier II bonds - series VII (option B), of Rs 50.50 crore.
The rating downgrade necessarily factors in the classification of the bank under prompt corrective action (PCA) framework by the regulator. The PCA is on account of high net NPA, insufficient CRAR and CET-1 and negative RoA for two consecutive years, based on the on-site inspection under the risk based supervision carried out for the year ended 31 March 2019. As of Q1 FY20, the bank's business stood at Rs 49,536 crore with Deposits of Rs.28,980 crore and advances of Rs 20,556 crore. The bank's capital adequacy ratios as of 31 June 2019 are below the regulatory capital requirements and asset quality continues to remain stressed.
Lakshmi Vilas Bank announced on 2 October, 2019 that Supriya Prakash Sen resigned from the directorship of the bank.
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On Friday, 27 September 2019, shares of LVB fell 4.94% after the Economic Offences Wing (EOW) of the Delhi Police registered a case against the bank alleging misappropriation of Religare Finvest's (RFL's) fixed deposits held in the bank.
LVB clarified post trading hours on Friday, 27 September 2019, that mere registration of FIR against the bank does not mean anything at this stage. The bank is committed to cooperate with the investigating agencies and regulatory authorities apparently in order to bring out the malicious attempts of RFL to mislead the public to coverup massive fraud indulged by their own promoters/employees/group companies.
Meanwhile, the S&P BSE Sensex was down 148 points or 0.39% to 38030.36.
On the BSE, 10,000 shares were traded in the counter so far compared with average daily volumes of 32,000 shares in the past two weeks. The stock hit an intraday high and low and a 52-week low of Rs 25.65 so far during the day. The stock hit a 52-week high of Rs 97.35 on 09 Apr 2019.
LVB reported a net loss of Rs 237.25 crore in Q1 June 2019 over a net loss of Rs 123.87 crore in Q1 June 2019 over Q1 June 2018. Total income fell 14% to Rs 677.17 crore in Q1 June 2019 over Q1 June 2018.
LVB is a scheduled commercial bank. As on 30 June 2019, Lakshmi Vilas Bank had 569 branches, 5 extension counters, 1047 ATMs in 18 states and 1 union territory. The bank offers various bouquets of products and services.
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