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The RBI warning to Manappuram Finance Ltd (MFL) that any acceptance of public deposits either by it or by group company Manappuram Agro Farms (MAGRO) was punishable set off frenzied trading in the counter on the BSE and the NSE with the stock shedding substantial value.
The company, however, has clarified that it does not accept any public deposits and has called for a meeting of its board of directors on February 10 to discuss the RBI press release and review the measures to “further improve the corporate governance practices of the company”.
The RBI on Monday said that it had come across instances of MFL accepting public deposits even after becoming a non-deposit-taking NBFC, and warned that acceptance of deposits by either MFL or its group company MAGRO was punishable with imprisonment.
Mr I. Unnikrishnan, Managing Director of the Thrissur-based MFL, in a release posted on the BSE Web site, said that his company did not accept any public deposits. But it was “accepting investments through secured non-convertible debentures (NCDs) and subordinate bonds which do not fall under the definition of public deposits”.
Re-categorised in 2011
He said the company was earlier known as Manappuram General Finance and Leasing Ltd and classified as a deposit-taking NBFC. The company was re-categorised as a non-deposit-taking NBFC in 2011 by the RBI on the request made by the company and the existing depositors, at that time, were mostly repaid (with interest) prior to the re-categorisation.
The balance portion of the deposits was held in an escrow account and this was intimated to the RBI in March 2011. Subsequently, the name of the company was also changed to Manappuram Finance Ltd.
Though the company, through its press release and through the media interactions of its Managing Director, got into a damage control mode, clarifying that it was not accepting public deposits, the scrip witnessed heavy selling and lost significant value.
In the NSE, the stock witnessed a trading volume of 2.67 crore shares and shed Rs 11.25 or 19.95 per cent to close at Rs 45.15.
In the BSE, the share lost Rs 11.35 or 19.96 per cent to close at Rs 45.50 with a trading volume of 55.0 lakh shares.
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