The Reserve Bank of India (RBI) has mandated to obtain its approval for any takeover or merger of non-banking financial companies (NBFCs), as the regulator aims to ensure proper management of such firms.
The order, which is effective for all the NBFCs including both deposit accepting and non-deposit accepting firms, states that any such deal 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, will require prior consent of RBI.
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According to the directive, its prior written approval would also be required before approaching the court or tribunal seeking order for mergers or amalgamations with other companies or NBFCs.
The central bank has warned that the acquisition of shares/ takeover of an NBFC without the prior approval of the RBI will attract regulatory action, including cancellation of Certificate of Registration of the concerned NBFC.
The RBI said these directions will be effective immediately.
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