Indiabulls Housing Finance Ltd is leaving no stone unturned to get its merger with Lakshmi Vilas Bank (LVB) approved by regulators. In its latest bid, the company has reportedly apprised the Reserve Bank of India that it is ready to restrain its chairman Sameer Gehlaut from being the heading the merged entity or hold any board position.
“Indiabulls Group officials have informally told this to RBI. They have indicated that Indiabulls will comply with whatever the regulator wants,” an Economic Times report quoted a source privy to the matter.
Indiabulls Housing Finance had earlier announced Sameer Gehlaut’s name as the non-executive chairman in the amalgamated bank.
Gehlaut had given verbal assurance to RBI at a recent meeting with the central bank officials. Gehlaut promised RBI that he and other corporate promoters of Indiabulls Housing Finance would declassify themselves from being the promoter group in the new amalgamated bank, according to the report.
As per rules issued by market regulator Securities Exchange Board of India (Sebi), a combined promoter holding of less than 10% fulfils the conditions of ‘depromoterisation’ in the merged entity.
This is in line with a letter written by Gehlaut to RBI a month back, where he had mentioned that the Indiabulls promoter group shareholding would be lowered below 10% in the proposed bank to be formed after the amalgamation of Indiabulls Housing Finance with Lakshmi Vilas Bank.
The banking regulator has still not approved the share-swap deal announced by Indiabulls Housing Finance and Lakshmi Vilas Bank in April earlier this year. The report said that RBI is still waiting for the feedback from the Enforcement Directorate and income-tax department on Indiabulls promoters.
In a separate development, RBI on Friday placed Lakshmi Vilas Bank under the regulator’s prompt corrective action (PCA) framework due to the private lender’s high non-performing assets, insufficient capital, high leverage and a negative return on assets for two consecutive years.
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