CURRENT AFFAIRS
CURRENT AFFAIRS
Description
Aditya Birla Capital's move to merge with its wholly-owned subsidiary, Aditya Birla Finance, is expected to change India's NBFC environment. This strategic decision not only consolidates their financial services branch, but also ensures compliance with RBI requirements, avoiding the need for Aditya Birla Finance to go public.
Development
On March 11, the board of Aditya Birla Capital authorized the transaction, subject to regulatory approvals.
Aditya Birla Capital will shift from a holding company to an NBFC after the transaction is completed, increasing its financial stability and flexibility.
Vishakha Mulye as MD and CEO, and Rakesh Singh as Executive Director and CEO (NBFC), are key leadership responsibilities following the merger.
Regulatory Compliance
The combination complies with the RBI's scale-based criteria, exempting Aditya Birla Finance from required listing on September 30, 2025.
Aditya Birla Finance, which is ranked higher on the RBI's list, would be subject to stricter regulatory restrictions for the next five years.
Business Development And Numbers
The combined AUM of the merging entities is projected to reach Rs. 5 lakh crore.
Aditya Birla Capital's total AUM as of December 31, 2023 was above Rs. 4.10 lakh crore, with Aditya Birla Finance contributing Rs. 98,600 crore.
Diverse business portfolio, including financing and wealth management products.
Industry Impact
While the merger opens up a major market opportunity for the combined business, experts believe it will have little influence on other NBFC companies.
Saurabh Bhalerao of CareEdge underlines that existing players have developed their businesses and will continue to operate undisturbed by the merger.
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