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Mahindra and Mahindra Financial Services (Mahindra Finance) has tanked 16% to Rs 216 in late noon deals after the non-banking financial company (NBFC) said that it is not applying for bank licence.
The stock is currently trading lower by 7% at Rs 239, recovered by almost 11% on BSE. A combined 5.24 million shares have changed hands on the counter till 1449 hours against an average sub 2 million shares that were traded daily in past two weeks on BSE and NSE.
“The board has decided not to proceed with the application for a banking licence, after reviewing the implications of the present guidelines issued by the Reserve Bank of India (RBI),” Mahindra Finance said in a BSE filing.
The company said, guidelines don’t provide any flexibility for NBFC and bank to co-exist for a reasonable period of time.
“The regulations require that cash reserve ratio (CRR) and statutory liquidity ratio (SLR) norms will be applicable from inception, even though building of current account savings account (CASA) will take some time for newly converted bank” the statement further said adding “this anomaly will impose an undue penalty on large asset financing NBFC.”
“If the guidelines are amended to permit co-existence of NBFC and bank in the same group or if concerns are addresses in some other manner, the company will be applying for the banking licence,” it added.
The stock is currently trading lower by 7% at Rs 239, recovered by almost 11% on BSE. A combined 5.24 million shares have changed hands on the counter till 1449 hours against an average sub 2 million shares that were traded daily in past two weeks on BSE and NSE.
“The board has decided not to proceed with the application for a banking licence, after reviewing the implications of the present guidelines issued by the Reserve Bank of India (RBI),” Mahindra Finance said in a BSE filing.
The company said, guidelines don’t provide any flexibility for NBFC and bank to co-exist for a reasonable period of time.
“The regulations require that cash reserve ratio (CRR) and statutory liquidity ratio (SLR) norms will be applicable from inception, even though building of current account savings account (CASA) will take some time for newly converted bank” the statement further said adding “this anomaly will impose an undue penalty on large asset financing NBFC.”
“If the guidelines are amended to permit co-existence of NBFC and bank in the same group or if concerns are addresses in some other manner, the company will be applying for the banking licence,” it added.
