The RBI has turned down the proposal of Muthoot Finance Ltd. to acquire IDBI Bank’s mutual fund business. According to a regulatory filing by IDBI Bank Ltd. on November 24, a share purchase agreement concerning the sale of IDBI Mutual Fund to Muthoot Finance was signed on November 22, 2019.
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 does not align with the activity of an operating NBFC”, the company said in a stock exchange filing.
Muthoot Finance had proposed to purchase 100 equity shares of IDBI AMC and IDBI MF Trustee Company held by the sellers for a total consideration of ₹215 crores.
The company said that a “share purchase agreement dated November 22, 2019, was entered into by and between Muthoot Finance Limited, IDBI Bank Limited, IDBI Capital Markets & Securities Limited, IDBI Asset Management Limited, and IDBI MF Trustee Company Limited about the proposal for acquisition by Muthoot Finance Limited of 100% equity shares of IDBI Asset Management Limited held by IDBI Bank Limited and its nominees and IDBI Capital Markets & Securities Limited, and 100 % equity shares of IDBI MF Trustee Company Limited held by IDBI Bank Limited and its nominees”.