RBI has rejected Indiabulls Housing–Lakshmi Vilas Bank merger. What next?
RBI’s rejection of the deal basically indicates that it does not trust the books of non-bank companies, particularly, those with links to the real estate sector. That would have ripple effect across the sector and increases the risk of contagion as fear and a trust deficit spreads throughout the financial system.
October 11, 2019 / 08:34 AM IST
When it came to a decision on the Lakshmi Vilas Bank – Indiabulls Housing Finance merger, it was always a lose-lose situation for the Reserve Bank of India. Both organisations are battling legal troubles and allegations of impropriety which they have refuted strongly. A nod for their union would have had people asking questions about whether the central bank was applying its fit-and-proper criteria correctly.
In that sense, this is probably the right decision.
But now that it has nixed the...