Leading gold finance company Manappuram Finance will separate operations from its promoter Magro (Manappuram Agro Farm) by May 10, after the RBI recently came out with a notification saying its branches were taking deposits in the name of its promoter entity.
Following this, the company stopped receiving deposits from the public in the name of Magro, a sole proprietary concern of its Executive Chairman Mr V.P. Nandakumar.
“The operations of Manappuram Finance will be separated from Magro by May 10 and the process has already started from February 10,” the Manappuram Finance Managing Director, Mr I. Unnikrishnan, told PTI.
Some procedural issues are being worked out, he added.
The RBI, on February 6, had said the branches of the Thrissur-based Manappuram Finance were being used by Magro to mop up deposits for itself. The regulator also expressed concern about non-adherence to its regulations, corporate governance and operational issues.
As to corporate governance, Mr Unnikrishnan said it is a continuous process and the company is working on it.
Following the warning by the RBI, the company constituted an independent committee to improve the processes and corporate governance, and appointed an independent legal counsel and accounting firm to assist the committee.
Mr Unnikrishnan said operations at the firm are as usual, and he expects sound growth in the current fiscal. Meanwhile, rating agency Care downgraded the non-convertible debentures of Manappuram Finance by one notch to Care A+ from Care AA- following the central bank’s instruction.
As per the reports, the company management has informed Care that public deposits held by Magro as of February 10, 2012, were Rs 126.4 crore, which it intends to repay in a timebound manner as per the central bank’s instruction.
The net profit of Manappuram Finance rose 117 per cent to Rs 161.37 crore in the December quarter.