Brickwork places 'BWR AA-' rating to Manappuram's NCD issue

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Brickwork places 'BWR AA-' rating to Manappuram's NCD issue

Brickwork Ratings has placed its ratings on Manappuram Finance Limited on watch with developing implications.

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Brickwork Ratings has placed its ratings on Manappuram Finance Limited  on watch with developing implications.

The rating action follows Reserve Bank of India's press release, dated February 6, 2012, wherein Reserve Bank of India (RBI) advised  that Manappuram Finance, Thrissur, Kerala (earlier known as Manappuram General Finance and Leasing Ltd.), is not permitted under the Reserve Bank of India Act, 1934, to accept/renew deposits from the public. The RBI has stated that acceptance of deposits either by Manappuram Finance or by Manappuram Agro Farms (MAGRO), a sole proprietary concern of Shri V.P Nandakumar who is the Executive Chairman of Manappuram Finance, is punishable with imprisonment and has cautioned the general public that those who deposit money with Manappuram Finance Limited or MAGRO do so at their own risk.

RBI in its press release has stated that Manappuram Finance Limited has changed its status to non-deposit taking non-banking financial company with effect from March 22, 2011 and has also noticed that Manappuram Finance has been accepting deposits from the public in its branches and offices, and has been issuing deposit receipts in the name of MAGRO. Acceptance of deposits from the public, including renewal of matured deposits by the company, amounts to contravention of the terms and conditions of the certificate of registration currently held by it and the directions issued to the Reserve Bank and thus punishable under the Reserve Bank of India, 1934 (RBI Act). In terms of Section 45-S of the RBI Act, acceptance of deposits from the public by MAGRO, which is an unincorporated body, is also prohibited.

BWR is in discussions with Manappuram Finance Limited's management and is closely monitoring the developments. BWR will examine the impact of these developments on the credit profile of the company and will keep the investors updated on the implication of the same.

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To read the full report click on the attachment