MUMBAI, April 5 (Xinhua) -- Private lender Lakshmi Vilas Bank on Friday approved a scheme of merger with lndiabulls Housing Finance to have a combined net worth of 2.81 billion U.S. dollars and a loan book of 17.83 billion U.S. dollars, Lakshmi Vilas Bank said on Friday.
The amalgamation will create a large and healthy diverse retail asset book, high capital base for strong growth, huge opportunity to foray into newer businesses, the bank said in a statement.
Indiabulls Housing Finance termed the merger as an opportunity to create a stable low-cost funding option in the form of public deposits and expanded distribution franchise.
"Proposed merger of Lakshmi Vilas Bank with Indiabulls housing finance would bring some relief to the shareholders of bank which is in the weak financial position. Since the Indiabulls assets size is more than three times that of Lakshmi Vilas bank, merger entity business would be more dominated by the NBFC (non-banking financial company) operations. The key factor going forward would be the way RBI (Reserve Bank of India) perceives this entity for transferring the banking license," said Satish Kumar, research analyst at Choice Stock Broking.
Earlier this week, the operations of the merged entity of three state-run banks - Bank of Baroda, Dena Bank and Vijaya Bank - became effective with a total business mix of 216 billion U.S. dollars to become the third largest lender in India after State Bank of India and HDFC Bank and ahead of ICICI Bank.
Bank of Baroda overtook debt-ridden Punjab National Bank as the second largest public sector bank.
