Lakshmi Vilas Bank shares tumbled about 5 per cent on Monday to hit its lower circuit limit after the Reserve Bank initiated a prompt corrective action plan against the lender due to high level of bad loans.
The bank's scrip declined 4.92 per cent to trade at Rs 34.75 apiece in afternoon deals on the BSE.
In a filling to the BSE on Saturday, Lakshmi Vilas Bank informed that prompt corrective action plan is initiated by the RBI.
The regulatory action may cast doubts over the proposed merger of Indiabulls Housing Finance with LVB, which is awaiting RBI nod.
However, the bank said that customers of the bank can do normal business at the branches.
On the other hand, Indiabulls Housing Finance, which had proposed to merge with Lakshmi Vilas Bank, also plunged over 30 per cent to Rs 271 a share.