"The bank is proposing to make a preferential allotment to Indiabulls Housing Finance to the extent of 4.99% of the bank's post-money equity," LVB said in a statement.
It is expected that the relevant date (of allotment of equity) could be by the end of April 2019, it added.
"This does not presuppose any capital augmentation on account of the proposed merger, which would only conclude after receipt of all regulatory approvals," it added.
Earlier this month, the private sector lender had announced its merger with Indiabulls Housing Finance Ltd (IBHL) in a share-swap deal with an intent to create a combined entity with larger capital base and wider geographical reach.
The board of LVB has approved the merger with IBHL in which shareholders of the bank will get 14 shares of IBHL for every 100 shares they hold.
The combined entity, with employee strength of 14,302, will have a loan book size of ₹1.23 lakh crore for the first nine month period of 2018-19.