The Reserve Bank of India (RBI) has rejected the proposed acqusition of IDBI Mutual Fund by Muthoot Finance.
In a regulatory filing on Tuesday, Muthoot Finance said that the request for a no objection certificate was not acceded to by the RBI on the ground that "the activity of sponsoring a Mutual Fund or owning an asset management company is not in consonance with the activity of an operating NBFC".
Muthoot has informed that Securities and Exchange Board of India that the gold loan based NBFC is unable to proceed with the proposed transaction.
Muthoot Finance, IDBI Bank, IDBI Capital Markets & Securities Ltd, IDBI Asset Management Ltd and IDBI MF Trustee Company Ltd had signed a share purchase agreement in November last year in relation to the proposal for acquisition by Muthoot Finance of 100 per cent equity shares of IDBI AMC held by IDBI Bank and its nominees and IDBI Capital Markets & Securities, and 100 per cent equity shares of IDBI MF Trustee Company held by IDBI Bank and its nominees subject regulatory approvals.
Shares of Muthoot Finance on Tuesday closed at Rs 1,138.10, lower by Rs 17.60, or 1.52 per cent, from its previous close.