The Reserve Bank of India (RBI) has clarified that its nominee directors on the board of Lakshmi Vilas Bank (LVB) had no views on the merger proposal with Indiabulls Housing Finance and that the banking regulator would examine the proposal as and when received.
In a late evening press statement on Saturday — a day after the two entities announced the merger — the RBI said: “It is clarified that the merger announcement does not have any approval of RBI at this stage.”
“It is also clarified that presence of Additional Directors nominated by the RBI on the board of LVB does not imply any approval of the RBI of the merger proposal. Moreover, the Additional Directors have clearly mentioned at the meeting that they have no view on the proposal,” the RBI said in response to some media reports that the presence of RBI directors on the board meant indirect approval for the proposal.
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There are two nominee directors of the RBI on the LVB board. Following the RBI statement, LVB also issued a release saying while the board unanimously approved the proposal, the RBI-nominee directors did not have to participate in the voting or express any views, as is the practice in the bank. RBI said the proposal for the merger, when received, would be examined. “The proposals, as and when received from these entities, will be examined in RBI as per extant regulatory guidelines/directions,” the RBI said.