RBI turns down Muthoot Finance’s proposal to acquire IDBI Bank’s mutual fund business
The RBI has turned down the proposal of Muthoot Finance to acquire IDBI Bank’s mutual fund business, saying sponsoring a mutual fund will not be in consonance with the exercise of an working NBFC. According to a regulatory submitting by IDBI Bank on Tuesday, a share buy settlement with regard to sale of IDBI Mutual Fund to Muthoot Finance was signed on November 22, 2019.
“The agreement was entered into by and between Muthoot Finance, IDBI Bank, IDBI Capital Markets & Securities, IDBI Asset Management and IDBI MF Trustee Company… for acquisition by Muthoot Finance of 100% equity shares of IDBI Asset Management 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,” it mentioned.
This was topic to receipt of vital regulatory approvals from the Securities and Exchange Board of India (Sebi) and different regulators.
“As advised by Muthoot Finance, we (IDBI Bank) would like to inform that their request for a no objection certificate was not acceded to by Reserve Bank of India 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,” the submitting mentioned.
Muthoot Finance had proposed to buy 100 fairness shares of IDBI AMC and IDBI MF Trustee Company held by the sellers for a complete consideration of Rs 215 crore.