Conserve capital, the loud, clear message from RBI to NBFCs and banks

Muthoot Finance and Axis Bank are instances of the regulator objecting to acquisitions

Topics
Indian Banks | Reserve Bank of India | Muthoot Finance

Hamsini Karthik 

With assets under management of Rs 47,000 crore and a liquidity comfort of 25 per cent tier-1 capital adequacy, the Reserve Bank of India’s (RBI) decision to reject Muthoot Finance’s application to buy IDBI Bank’s asset management company (AMC) for Rs 250 crore came as a surprise. A lack of experience in operating a non-banking financial company (NBFC) was the reason for rejection.

For a lender diversified into segments such as microfinance and affordable housing, it is a natural aspiration to look beyond the usual streams of lending business. When larger peers such as ...

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First Published: Wed, November 25 2020. 13:32 IST
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