M&M Fin continues to sulk

Mahindra & Mahindra Financial Services continues to sulk even today on the bourses. It remains amongst the top losers on the BSE, currently down almost 4.5% at Rs.226 closer to its intra day low point of Rs.223.

The stock is down after the company stated that it has decided to not apply for the banking license. It was considered to one of the strong candidates for the license and this decision has disappointed the market. The company said that it plans to continues with its present business as ususal, as an independent NBFC.

The company said that it was not happy with the stringent conditionalities of RBI and in a Press Release stated that -  RBI guidelines provide for the conversion of NBFCs into a bank, but do not provide any flexibility for an NBFC and a bank to co-exist for a reasonable period of time. The regulations provide that CRR and SLR will be applicable from inception, even though building of CASA (current account, savings accounts) will take some time for a newly converted bank,” the company said in a statement. The current set of guidelines, as clarified, has an adverse economic and operational impact on the business of larger NBFCs. A time-bound co-existence of an NBFC and a bank in the same group would help set up a sustainable model and address the concerns of all stakeholders, including the customer base both current and future.