Small private banks in spotlight after Lakshmi Vilas Bank-Indiabulls merger

The huge valuation premium given to Lakshmi Vilas Bank and merger potential of other banks are driving up investor sentiment

The Street is keenly awaiting the Reserve Bank of India’s (RBI’s) decision on the merger of Lakshmi Vilas Bank (LVB) and Indiabulls Housing Finance, which was announced earlier this month. 

While some may be extrapolating from the market buzz and the RBI’s clarification that came after the merger was internally approved of by the two lenders, the move, if the regulator approves, is likely to bring stocks of other old small private lenders in focus. The old small private sector banks include Karur Vysya Bank, Karnataka Bank, South Indian Bank and Dhanlaxmi Bank.

Stocks of many of the above-mentioned banks