Indiabulls Housing Finance Aims 20% Growth Even As Lakshmi Vilas Bank Merger Plan Fails
With the uncertainty aroung the Indiabulls-Lakshmi Vilas Bank merger gone, we can get back 20% growth, says MD Gagan Banga.
Indiabulls Housing Finance Ltd. said it will continue to grow at 20 percent per year and give similar returns on equity even as its merger with The Lakshmi Vilas Bank Ltd. failed.
“I think that now with the uncertainty around the merger gone, we can get back to the housing finance company, which has historically been compounding its books at 20 percent,” Gagan Banga, managing director at Indiabulls Housing Finance, told BloombergQuint over the phone.
To fuel the 20 percent growth, the company may partner banks for sustainable capital in the long term, Banga said, adding he had several meetings with prospective lenders.
Since the shock defaults by IL&FS Group subsidiaries last year, non-bank lenders, including Indiabulls Housing Finance, have struggled to raise fresh funds to fuel growth. The NBFC, which was banking on deposits from Lakshmi Vilas Bank, will now have to rethink its refinancing strategy.
On Wednesday, the Reserve Bank of India rejected a proposed merger of Indiabulls Housing Finance and Lakshmi Vilas Bank. The companies first proposed the merger in April this year. Subsequently, the two firms amended the structure of the deal, including amalgamation of Indiabulls Housing and Indiabulls Commercial Credit into the bank, and reducing Indiabulls Group’s exposure to the real estate sector, to meet RBI’s rules for new bank licences. Yet, the central bank didn’t approve the merger.
“Ever since we announced the merger six months ago, we’ve been under tremendous attacks and that has definitely harmed the perception of the company,” Banga said. The RBI, according to Banga, may have denied approval as the deal seemed more of an acquisition rather than a merger as the non-bank financial company was 4-5 times the size of the bank. “That’s something the RBI was not too happy with.”
Yet, Banga is optimistic about the future. While it may take 2-3 months to weather the attacks mounted over the last few months, he said Indiabulls Housing Finance will return to its 20 percent growth.
Watch | MD Gagan Banga on the way forward for Indiabulls Housing Finance