ICRA placed debt instruments of Manappuram Fin on watch

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ICRA placed debt instruments of Manappuram Fin on watch

ICRA has placed the ratings of [ICRA]A+, MA+ and [ICRA]A1+ of the debt instruments of Manappuram Finance Limited (MFIN) on watch with developing implications. This follows RBI’s observations with respect to acceptance of deposits by the company.

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Manappuram BSE | NSE 29/05/12 Are Mutual Funds betting on Manappuram?

ICRA has placed the ratings of [ICRA]A+, MA+ and [ICRA]A1+ of the debt instruments of Manappuram Finance Limited (MFIN) on watch with developing implications. This follows RBI's observations with respect to acceptance of deposits by the company.

On February 6, 2012, Reserve Bank of India issued a press release that MFIN is not permitted to accept / renew deposits from the public and further stated that acceptance of deposits either by MFIN or by Manappuram Agro Farms (MAGRO, a proprietary concern of the promoter Mr. V. P. Nandakumar, Executive Chairman, MFIN) is punishable with imprisonment. Reserve Bank has also noticed that MFIN has been accepting deposits from the public in its branches and has been issuing deposit receipts in the name of MAGRO. Acceptance of deposits from the public, including renewal of matured deposits by that company, thus amounting 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 is thus punishable under the Reserve Bank of India, 1934 (RBI Act).

MFIN became a non-deposit accepting company from March 2011 and had deposits of Rs. 1.24 crore as on March 31, 2011 (which were held in an escrow account with a Bank). Public deposits held in MAGRO are Rs. 134.54 crore as on Feb 8, 2012. MFIN's Board is meeting on February 10, 2012 to discuss the measures to improve the corporate governance of the company.

ICRA is closely monitoring the developments and would keep the investors updated on the implication of the same on the credit profile of MFIN.

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