Aditya Birla Capital on Monday announced the merger of its wholly-owned subsidiary Aditya Birla Finance (ABF) with itself as the large non-bank lender seeks to comply with RBI's mandate on scale-based regulations.

Aditya Birla Capital (ABC) is a listed systemically important non-deposit-taking core investment company while ABF is a non-deposit-taking systemically important NBFC (non-bank finance company).

"Post completion of the amalgamation, Aditya Birla Capital will get converted from a holding company to an operating NBFC. This will create a unified large entity with greater financial strength and flexibility enabling direct access to capital," a statement said.

This will make Aditya Birla Finance the first entity among the upper layer non-bank finance companies (NBFCs) to set a clear path for complying with RBI's scale-based regulations which require mandatory listing of ABF by September 2025, the statement said.

Some entities are still grappling with the issue at hand and Tata Sons is reportedly looking at ways of complying with the RBI mandate first released in September 2022. The RBI had then come out with a list of 16 upper-layer NBFCs that need to follow the requirements including mandatory listing by September 30, 2025.

ABC, which offers lending, investments, insurance, payments and cards, had over ₹4.10 lakh crore of assets under management as of December, while the same for ABF, which primarily undertakes lending activities, was ₹98,600 crore.

The statement from ABC said the amalgamation is subject to regulatory and other approvals as may be required.

Aditya Birla Group chairman Kumar Mangalam Birla said the proposed amalgamation will create a strong capital base for Aditya Birla Capital to grow its business and added that the financial services business has scaled smartly to emerge as a core growth engine for the diversified conglomerate.

The statement said once the merger is effective, Vishakha Mulye shall assume the role as the managing director and chief executive of the merged entity, while Rakesh Singh will assume the role as executive director and chief executive (NBFC) of the amalgamated company.

"The proposed amalgamation will help us to serve our customers better, achieve efficient utilization of capital, enhance operational efficiencies, and holds the potential to create long-term value for all our stakeholders," Mulye, who serves as the chief executive of ABC at present, said.

She added that ABC follows an 'One ABC, One profit and loss' approach, and affirmed its commitment to driving quality and profitable growth by harnessing the power of data, digital and technology.

The statement also said that the merger will lead to other advantages including rationalization and simplification of group structure as the number of legal entities reduce, improve financial stability, enhance value for stakeholders and deliver more operational efficiencies.

The merger will ensure on-going compliance with the Scale Based Regulations applicable to NBFCs, as notified by the RBI, according to the statement.

The ABC scrip closed 1.32 per cent down at ₹179.65 apiece on the BSE on Monday, as against a 0.83 per cent correction on the benchmark.