Aditya Birla Capital has recently made a strategic decision to merge with its financial unit, Aditya Birla Finance, in order to align with the Reserve Bank of India (RBI) listing rules. This merger will result in Aditya Birla Capital transitioning from a holding company to an operational non-banking finance company (NBFC).
The merger has been approved by the company's board and aims to allow the unlisted subsidiary, Aditya Birla Finance, to bypass the public-listing requirement set by the RBI. This is significant as Aditya Birla Finance is among the 15 upper-layer non-bank lenders directed by the RBI to go public by September 2025. By merging with the already listed parent company, the subsidiary can avoid the need for a separate public listing process.
The main objective of this planned merger is to streamline the group's structure and transform it into a robust operational NBFC, moving away from its current holding company status. Simultaneously, the merger is expected to bring about greater business and operational synergies while reducing regulatory complexities.
The merger is in compliance with the scale-based regulations established by the RBI, with Aditya Birla Finance expected to achieve mandatory listing by September 30, 2025. As part of the amalgamation, Vishakha Mulye is set to assume the role of managing director and CEO, while Rakesh Singh is slated to become the executive director and CEO (NBFC) of the merged company, pending regulatory approvals.
Kumar Mangalam Birla, chairman of Aditya Birla Group, expressed in a statement that the proposed merger will create a strong capital base for Aditya Birla Capital, enabling it to expand its business and contribute to the financial aspirations of millions of Indians, thus aligning with India's growth story.
It should be noted that the proposed amalgamation is subject to the necessary regulatory and other approvals. Vishakha Mulye, CEO of Aditya Birla Capital, has informed analysts that once the merger is complete, the assets, liabilities, and entire business of Aditya Birla Finance will be transferred to Aditya Birla Capital. The merger process is estimated to take around 9–12 months to become effective.
Mulye also highlighted that, as per regulations, NBFCs are permitted to hold up to a 50% stake in insurance companies. Currently, Aditya Birla Capital holds 46% in Aditya Birla Health Insurance and 51% of Aditya Birla Sun Life Insurance. Therefore, 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.
To address this regulatory aspect, Mulye stated that the company intends to request permission from the RBI and comply with their guidance, demonstrating their intention to seek regulatory approval for the stake in the life insurance business.
