Swiss Bank UBS AG's purchase of Standard Chartered Plc's mutual funds business in India has hit a roadblock as India's central bank appears to have rejected the deal, the Economic Times newspaper said on Saturday, citing unidentified sources.
In January, the Swiss banking group bought 100 percent of Standard Chartered Asset Management Co Private Ltd and Standard Chartered Trustee Private Ltd for more than $118 million. "The central bank has blocked the deal citing existing restrictions on transfer of shares in a non-banking finance company (NBFC)," the paper said, quoting the unnamed sources.
The paper said an asset management company, which was managing the mutual funds, was the NBFC and the central bank bars NBFCs transferring shares without its approval. The central bank awards the licence for carrying out NBFC operations and in this case a secondary transaction entailed a transfer of this NBFC licence to UBS, it said.
"RBI (Reserve Bank of India) is learnt to have conveyed its decision about a month back, following which UBS has put in a fresh application," the paper said. "UBS considers its discussions with the regulators to be confidential. We would not presume to pre-empt the regulatory approval process by commenting further," a UBS spokeswoman told the paper.
The paper said in a recent regulatory filing Standard Chartered said it seemed unlikely that UBS would receive the requisite approvals in 2007, and therefore had not booked the sale proceeds in its accounts. A Standard Chartered spokeswoman told the paper the closure of the deal was subject to UBS securing all regulatory approvals.