The Reserve Bank of India (RBI) has rejected the proposed acquisition of IDBI Mutual Fund by Muthoot Finance. In a regulatory filing on Tuesday, Muthoot Finance said that the request for a no objection certificate was not acceded to by the RBI on the ground that "the activity of sponsoring a Mutual Fund or owning an asset management company is not in consonance with the activity of an operating NBFC". It added that Muthoot Finance Limited informed SEBI on November 23 that it is unable to proceed with the proposed transaction.
Muthoot has informed that Securities and Exchange Board of India that the gold loan based Non-Banking Financial Company (NBFC) is unable to proceed with the proposed transaction. A share purchase agreement was signed on November 22, 2019 for sale of IDBI Mutual Fund to Muthoot and the latter said in a regulatory filing that it has proposed to buy 100 equity shares of IDBI AMC and IDBI MF Trustee company for Rs 215 crore.
“A share purchase agreement dated November 22, 2019 was entered into by and between Muthoot Finance Limited, IDBI Bank Limited, IDBI Capital Markets & Securities Limited, IDBI Asset Management Limited and IDBI MF Trustee Company Limited ("Share Purchase Agreement") in relation to the proposal for acquisition by Muthoot Finance Limited of 100% equity shares of IDBI Asset Management Limited held by IDBI Bank Limited and its nominees and IDBI Capital Markets & Securities Limited, and 100 % equity shares of IDBI MF Trustee Company Limited held by IDBI Bank Limited and its nominees subject to receipt of necessary regulatory approvals from Securities and Exchange Board of India (“SEBI”) and other relevant regulators,” the company said in a regulatory filing.
Despite RBI rejecting the deal, Muthoot Finance’s shares were marginally up 0.61% on the BSE on Wednesday at Rs 1145 at of 10 20am. Shares of Muthoot Finance on Tuesday closed at Rs 1,138.10, lower by Rs 17.60, or 1.52 per cent, from its previous close.
With IANS inputs