Indiabulls Housing Finance Ltd shares cracked over 38% on Monday on the apprehensions that the proposed merger with Lakshmi Vilas Bank Ltd could face a setback as the central bank initiated corrective actions against the latter.
At 11:40 am, shares of Indiabulls Housing Finance were down by a massive 35.8%, to Rs 250.70 after hitting an intra-day low of Rs 240.05. Other Indiabulls Group stocks also tumbled, with Indiabulls Real Estate and Indiabulls Ventures down 10% and 20%, respectively. Lakshmi Vilas Bank shares were, meanwhile, down 5% to Rs 34.75.
The central bank placed Lakshmi Vilas Bank under prompt corrective action due to high non-performing assets, insufficient capital, high leverage and a negative return on assets for two consecutive years.
To recall, Lakshmi Vilas Bank and Indiabulls Housing Finance had announced a share-swap deal in April earlier this year. The Competition Commission of India had already given its green light to the proposed merger in June.
In a separate development, the Delhi High Court has also issued notice in a petition seeking a direction for an in-depth and time-bound investigation by a Special Investigation Team into the “illegalities and violations” committed by Indiabulls Housing Finance, its subsidiaries and promoters.
The petition alleged that Indiabulls Housing Finance, through its promoters and their various group companies and subsidiary companies, has been advancing dubious loans to companies owned by large corporate groups, which in turn have been routing the money back to the accounts of companies owned by the promoters of Indiabulls.
Notices have been issued to Indiabulls, its promoters, the central government and other stakeholders.
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Source: News18