Shares of 10 non-banking financial companies fell 0.44% to 6.99% at 13:02 IST on BSE after the Reserve Bank of India tightened merger and acquisition rules for non-banking financial companies.
IFCI (down 6.99%), Reliance Capital (down 3.65%), Manappuram Finance (down 3.62%), Muthoot Capital Services (down 3.45%), Shriram Transport Finance Company (down 2.22%), IDFC (down 2.16%), Muthoot Finance (down 1.71%), L&T Finance Holdings (down 1.70%), Bajaj Finance (down 0.80%) and Mahindra & Mahindra Financial Services (down 0.44%), edged lower.
The S&P BSE Sensex was down 179.50 points, or 0.73% at 24,537.38.
On Monday, 26 May 2014, the Reserve Bank of India (RBI) said that all non-banking finance companies (NBFC) will need RBI's prior approval to acquire or merge with similar entities. The regulator also clarified RBI's prior approval will not be required if a NBFC is acquiring less than 10% of another entity.
A prior approval of RBI is required in case of any takeover/acquisition of shares of an NBFC; or merger/amalgamation of an NBFC with another entity; or any merger/amalgamation of an entity with an NBFC, that would give the acquirer/ another entity control of the NBFC, or would result in acquisition/transfer of shareholding in excess of 10% of the paid up capital of the NBFC, RBI said in a statement
The requirement is applicable to all NBFCs, irrespective of it being a deposit taking or a non-deposit taking NBFC, RBI added.
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