Aditya Birla Capital to merge Aditya Birla Finance with itself to align with RBI listing rules

The merger will shift Aditya Birla Capital from a holding company to an operational non-banking finance company (NBFC).

Aditya Birla Capital announces its decision to merge its financial unit, Aditya Birla Finance with itself as it will allow the unlisted subsidiary to skip the public-listing requirement mandated by the Reserve Bank of India (RBI), as mentioned in The Times of India report. The merger has been approved by the company's board.

While Aditya Birla Capital is already listed, its wholly-owned arm, Aditya Birla Finance, falls among the 15 upper-layer non-bank lenders directed by the RBI to go public by September 2025. The merger with the listed parent will eliminate the necessity for the subsidiary to undergo a separate public listing process.

The company has stated that the planned merger aims to streamline the group's structure, turning it into a robust operational non-banking finance company (NBFC) from its current holding company status. The merger is expected to consolidate business and operational synergies while simultaneously diminishing regulatory complexities.

In adherence to the scale-based regulations set by RBI, Aditya Birla Finance is set to achieve mandatory listing by September 30, 2025. As part of the new amalgamation, Vishakha Mulye is proposed to take on the position of managing director and CEO, with Rakesh Singh slated to become the executive director and CEO (NBFC) of the amalgamated company, pending regulatory approvals.

Kumar Mangalam Birla, chairman, Aditya Birla Group, said in a statement, “The proposed amalgamation will create a strong capital base for Aditya Birla Capital to grow its business and participate in India’s growth story, successfully fulfilling its commitment to empower the financial aspirations of millions of Indians."

ABCL has clarified that the proposed amalgamation is contingent upon obtaining necessary regulatory and other approvals. Vishakha Mulye, CEO, Aditya Birla Capital, conveyed to analysts that upon the completion of the amalgamation, the assets, liabilities, and the entire business of Aditya Birla Finance would be transferred to Aditya Birla Capital. She further noted that the merger is expected to take 9-12 months to become effective.

She highlighted that, in accordance with regulations, NBFCs are permitted to hold up to 50% stake in insurance companies. Aditya Birla Capital currently holds 46% in Aditya Birla Health Insurance and 51% in Aditya Birla Sun Life Insurance. Consequently, following the transition of Aditya Birla Capital into an operating NBFC, its stake in the life insurance business would exceed the RBI's stipulated limit by a percentage point.

Mulye further stated, "We will request the RBI for permission and go by their guidance," indicating the company's intention to seek regulatory approval from RBI.