Muthoot Finance said Tuesday that the Reserve Bank of India did not agree to its proposed acquisition of the IDBI Mutual Fund.
The Reserve Bank of India did not accept Muthoot Finance Limited’s request for a certificate of no objection as “the activity of sponsoring a mutual fund or owning an asset management company is not in line with the activity of an NBFC operational “. the company said in a stock exchange presentation.
According to a regulatory filing, on November 22, 2019, a share purchase agreement was signed regarding the 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 owned by the sellers for full consideration of ₹215 crore.
The company said that Muthoot Finance Limited, IDBI Bank Limited, IDBI Capital Markets & Securities Limited, IDBI Asset Management Limited and IDBI MF Trustee Company Limited entered into a “share purchase agreement dated November 22, 2019 (” Purchase Agreement shares “) in connection with the proposed acquisition by Muthoot Finance Limited of 100% of the shares of IDBI Asset Management Limited held by IDBI Bank Limited and its nominees and IDBI Capital Markets & Securities Limited, and 100% of the shares of IDBI MF Trustee Company Limited held by IDBI Bank Limited and its nominees. “
This was subject to receiving the necessary regulatory approvals from the Securities and Exchange Board of India (Sebi) and other regulators.
IDBI Asset Management, also known as IDBI Mutual Fund, managed 22 schemes during fiscal year 20, comprising 12 equity fund schemes, six debt fund schemes, two hybrid fund schemes, and one of each Fund of Funds scheme. Gold and Traded Gold Exchange Funds.
On Monday, global rating agency Moody’s Investors Service said Muthoot Finance’s focus on gold lending will help its asset quality, noting that it does not anticipate a drop in gold prices, the biggest risks to make loans against the precious metal. .
Muthoot has strong profitability that will help it maintain capitalization and funding at the current strong level, the rating agency said.
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