Muthoot Finance and
IDBI Bank were in focus on Wednesday after the Reserve Bank of India (RBI) rejected the former's proposal to acquire 100% equity shares held in the later's IDBI Asset Management Company and IDBI MF Trustee Company.
In its regulatory filing, Muthoot said, "We would like to inform that Muthoot Finance Limited’s request for a no-objection certificate was not acceded to by the 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”.
"Consequently, we have informed SEBI vide our letter dated November 23, 20,20 that Muthoot Finance Limited is unable to proceed with the proposed transaction, said Muthoot in the regulatory filing."
Muthoot and IDBI had signed a share purchase agreement in November 2019. However, the agreement has been modified on five different occasions in the current year.
The latest agreement was the proposal to acquire 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, subject to receipt of regulatory approvals.
At around 1.57 pm, Muthoot stock was trading at Rs1131.90 per piece down 0,54% on Sensex. On the other hand, IDBI Bank stock was performing at Rs38.35 per piece up 1.59% on Sensex.