The merger between Inditrade Microfinance and Janakalyan Financial Services has been called off due to the failure to obtain regulatory approval from the Reserve Bank of India (RBI). Inditrade Microfinance, a subsidiary of the publicly listed Inditrade Capital, announced the decision after reviewing the current status of the merger proposal.
In a statement, the Board of Inditrade Microfinance stated that the decision to call off the merger was based on the inordinate delay in receiving the necessary regulatory and statutory approvals. Additionally, the company noted that there have been significant improvements in sectoral opportunities, which provide ample scope for substantial growth for the standalone business itself.
The company highlighted that the delay in obtaining regulatory approval and the management bandwidth required for pursuing the merger had diverted their focus from the growth prospects of the standalone business. Therefore, it was considered inappropriate to continue pursuing the merger at this stage.
The decision to scrap the merger comes as a disappointment for both Inditrade Microfinance and Janakalyan Financial Services, who had initially planned to join forces to leverage their respective strengths and enhance their market presence.
The proposed merger aimed to create a stronger entity by combining the expertise and resources of both organizations. It would have allowed them to expand their product offerings, improve operational efficiencies, and achieve greater financial stability.
However, the failure to obtain regulatory approval from the RBI has led to the termination of the merger plans. The exact reasons for the regulatory disapproval were not specified in the company’s statement.
The cancellation of the merger underscores the significance of regulatory approval in such transactions, as regulatory bodies play a crucial role in ensuring compliance, safeguarding the interests of stakeholders, and maintaining the stability of the financial sector.
Both Inditrade Microfinance and Janakalyan Financial Services will now refocus their efforts on their respective standalone businesses. Inditrade Microfinance expressed confidence in the growth prospects of its standalone business, given the favorable sectoral opportunities available.
While the merger may not proceed as planned, the two organizations may continue exploring other strategic options or partnerships in the future to capitalize on market opportunities and achieve their growth objectives.
It is important to note that the cancellation of the merger is subject to any legal or contractual obligations between the parties involved. The companies will also need to comply with any regulatory requirements in relation to the termination of the merger.
In conclusion, the proposed merger between Inditrade Microfinance and Janakalyan Financial Services has been called off due to the failure to obtain regulatory approval. The decision was made in light of the significant delay in securing the necessary approvals and the potential for substantial growth in the standalone businesses. Both companies will now refocus their efforts on their individual growth strategies.
