The Reserve Bank of India (RBI) has said that Manappuram Finance Ltd or group company Manappuram Agro Farms are not eligible to accept nay form of public deposits and any acceptance of deposits will be punishable.

The firm is not eligible to accept deposits as it has converted itself into a non-deposit taking non-banking financial company. The central bank said that the company is not permitted to accept deposits from the public and that is punishable with imprisonment.

Shares of Manappuram Finance fell 19 per cent this morning on the Bombay Stock Exchange (BSE) after the warning caused huge selling over the counters. The shares recovered a little and were trading at the level of Rs. 49.80, down 12.4 per cent on the BSE.

"The Reserve Bank advised that Manappuram Finance Limited, Thrissur, Kerala (earlier known as Manappuram General Finance and Leasing Ltd), is not permitted under the Reserve Bank of India Act, 1934, to accept/renew deposits from the public," A RBI statement read.

The statement also warned the general public that if they want to deposit funds with the Manappuram Finance Ltd or MAGRO, they can only do so at their own risk. It added that that accepting deposits by MAGRO is prohibited under the Section 45-S of the RBI Act.