Fresh regulations for M&As in the NBFIs sphere: The Financial regulatory Authority (FRA) has updated the regulations that govern mergers and acquisitions of non-banking financial institutions in a move aimed at enhancing competitiveness and streamlining the approval process, according to a statement.

Among the key changes: Under the new rules, mergers and acquisitions of NBFIs will only need to go through the FRA board if they end up giving the buyer a controlling stake in the market. Otherwise, the transaction can go through without the board’s approval.

If one NBFI wants to merge with another and the acquisition will give them market control, the board’s approval will also be necessary. The FRA will publish a M&A notice allowing for a 15-day public comment period for affected parties.

SOUND SMART- The regulator defines a controlling stake in the market as anything above the 10% mark.

Ins. companies get a special treatment: The FRA board approval remains mandatory for all M&A activity that involves acquiring an ins. or reins. firm. The authority’s approval will also be required if the buyer ups their stake to exceed one of a number of predetermined thresholds — between 10-90%.

Keeping taps on market dominance: The regulator will closely monitor any actions that could lead to a single entity or a related group controlling 10% or more of any non-banking financial activity’s market share to maintain balance and fair competition in the market.

The timelines: The FRA will have 45 days to either approve or reject any M&A requests. Approvals will be valid for a six-month period after that they will need to be extended or deemed void.

The end goal: The authority is working to facilitate business growth and create a more investment-friendly environment to attract more investments in the NBFIs by simplifying procedures while maintaining the required oversight.

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