RBI Rejects Muthoot Finance's Proposal To Acquire IDBI MF
The Reserve Bank of India (RBI) has rejected the proposed acqusition of IDBI Mutual Fund by Muthoot Finance Ltd saying that sponsoring a mutual fund is not in consonance with the activity of an operating non-banking finance company (NBFC). Last year in November, both parties had signed an agreement with regard to sale of IDBI Mutual Fund to Muthoot Finance. Muthoot Finance had proposed to purchase 100% equity shares of IDBI AMC and IDBI MF Trustee Company held by the sellers for about Rs215 crore.
 
In a regulatory filing, Muthoot Finance said that the request for a no objection certificate (NOC) was not acceded to by 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."

IDBI Bank, in a regulatory filing says, "As advised by Muthoot Finance, we (IDBI Bank) would like to inform that their request for a NOC was not acceded to by 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."
 
Muthoot Finance has informed the Securities and Exchange Board of India (SEBI) that the gold loan-based NBFC is unable to proceed with the proposed transaction.
 
Muthoot Finance, IDBI Bank, IDBI Capital Markets & Securities Ltd, IDBI Asset Management Ltd and IDBI MF Trustee Company Ltd had signed a share purchase agreement in November last year for a proposal for acquisition by Muthoot Finance of 100% equity shares of IDBI AMC held by IDBI Bank and its nominees and IDBI Capital Markets & Securities, and 100% equity shares of IDBI MF Trustee Company held by IDBI Bank and its nominees, subject regulatory approvals.
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    COMMENTS

    Ramesh Popat

    2 months ago

    good decision. idbi can be purchased by any other AMC at not
    too high price.

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