VP Nandakumar, promoter of the Kerala-based Manappuram Finance, which was ticked off by the Reserve Bank of India (RBI) recently, will sell about 4% stake worth Rs155 crore to institutional investors to repay all outstanding public deposits of group firm Manappuram Agro Farms.

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“I intend to repay all outstanding public deposits of Manappuram Agro Farms and honour all such obligations such that no inconvenience is caused to the depositors. Towards this effect, I intend to sell shortly approximately 4% of the share capital in Manappuram Finance on the stock exchange to certain reputable institutional investors,” he said in a statement to the stock exchanges.

Last month, the RBI had raised concerns on Manappuram Finance for acceptance of deposits. The RBI had said doing so either by Manappuram Finance or by Manappuram Agro Farms is punishable with imprisonment and has cautioned members of public that those who deposit money with Manappuram Finance or Agro do so at their own risk.

Under the RBI Act, 1934, Manappuram Finance is not permitted to accept or renew deposits from the public. It is registered with the RBI as a deposit taking non-banking financial company.However, it became a non-deposit taking non-banking financial company with effect from March 22, 2011.

Acceptance of deposits from the public, including renewal of matured deposits by that company, thus, amounts to contravention of the terms and conditions of the certificate of registration currently held by it and the directions issued to the RBI and is thus punishable under the RBI, 1934 (RBI Act), the RBI had said in a press release last month.

However, at that time, Manappuram Finance’s managing director, I Unnikrishnan refuted the allegation and said the company does not accept any public deposits.

“It is accepting investments through secured non-convertible debentures and subordinate bonds which do not fall under the definition of public deposits,” Unnikrishnan had said.