Lakshmi Vilas Bank drops 5% to hit lower circuit; Indiabulls Housing plunges over 34%

Mumbai: Lakshmi Vilas Bank shares tumbled about 5 per cent on Monday to hit its lower circuit limit after the Reserve Bank initiated a prompt corrective action plan against the lender due to high level of bad loans.

The bank's scrip declined 4.92 per cent to Rs 34.75 apiece -- its lowest trading permissible limit for the day as well as one-year-low-- on the BSE.

On the NSE, shares fell 4.93 per cent to Rs 34.70 -- its 52-week low as well as lower circuit.

In a filling to the BSE on Saturday, Lakshmi Vilas Bank (LVB) informed that prompt corrective action (PCA) plan is initiated by the RBI.

However, the bank said that customers of the bank can do normal business at the branches.

The regulatory action may cast doubts over the proposed merger of Indiabulls Housing Finance with LVB, which is awaiting the RBI nod.

Indiabulls Housing Finance, which had proposed to merge with Lakshmi Vilas Bank, also plunged 34.39 per cent to close at Rs 255.50 apiece on the BSE. During the day, it tanked 38.34 per cent to Rs 240.10 -- its 52-week low.

Other group stocks also dropped, with Indiabulls Ventures cracking 19.98 per cent, Indiabulls Real Estate plunging 9.91 per cent and Indiabulls Integrated Services 4.98 per cent.

Under the PCA, banks are mandated to cut lending to corporates and focus on reducing the concentration of loans to certain sectors. They are also restricted from opening new branches and paying dividends.

Shares of Lakshmi Vilas Bank tumbled 5 per cent on Friday amid concerns over allegations of various offences including cheating against directors of the company.