The Reserve Bank of India has tightened merger rules for non-banking finance companies (NBFCs), requiring them to obtain the RBI permission to acquire or merge with any similar entity. Previously, only deposit-taking NBFCs were required to get approval for a takeover or merger. According to the RBI, any merger or amalgamation of an NBFC with another entity or an entity with an NBFC that would give the acquirer or another entity control of the NBFC will need its approval. Any merger or amalgamation of an NBFC with another entity or an entity with an NBFC which would result in acquisition or transfer of shareholding in excess of 10 per cent of the paid up capital of the NBFC will also require the RBI nod.
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