The board of Tamil Nadu-based Lakshmi Vilas Bank on Friday approved the merger with Indiabulls Housing Finance.

According to the share swap ratio, which has been fixed at 1:014, for every 100 shares of Lakshmi Vilas Bank held by shareholders, they will be entitled to receive 14 shares of Indiabulls Housing Finance.

Lakshmi Vilas Bank said the merger with Indiabulls Housing Finance has unlocked various synergies for both the companies and it will create a large and healthy diverse retail asset book.

Further, Indiabulls Housing Finance said the appointed date for the scheme is January 1, 2018, or another date agreed by merging companies.

In an exclusive interview to CNBC-TV18, Gagan Banga, vice chairman and managing director, Indiabulls Housing Finance, said the merger is an amalgamation and not a new bank license.

According to Banga, the merged entity would be the eighth largest private bank in the country, with 800 branches and a market capitalisation of over Rs 40,000 crore.

Further, Banga said Indiabulls Housing is qualified for all norms of a banking license and will apply to the Reserve Bank of India (RBI).

The merger between Indiabulls Housing Finance and Lakshmi Vilas Bank is a good move for the financial sector, said Deepak Parekh, chairman, HDFC, "Banks and non-banking finance companies (NBFCs) merging is the way forward."

The merger is subject to the receipt of approval from the RBI and all other regulatory approvals.

Shares of Lakshmi Vilas Bank settled at Rs 92.75 apiece, up 4.98 percent on the BSE today. The stock of Indiabulls Housing Finance closed 0.53 percent up at Rs 903.15 on the BSE.

First Published:Apr 5, 2019 5:38 PM IST