New Delhi: The merger of Tata Motors Finance with Tata Capital has been approved by their respective boards, according to a filing. Tata Motors Finance Ltd is step-down wholly-owned subsidiary of Tata Motors Ltd.

The auto major in the filing stated that its board has also approved the merger of Tata Motors Finance Ltd with Tata Capital Ltd. "The Board of Directors of Tata Motors Limited (TML), Tata Capital Limited (TCL) and Tata Motors Finance Ltd (TMFL) have today approved a merger of TMFL with TCL through an NCLT scheme of arrangement," the filing said.

As consideration for the merger, TCL will issue its equity shares to the shareholders of TMFL resulting in Tata Motors effectively holding a 4.7 per cent stake in the merged entity, it said. The transaction is also in line with the automaker's stated objective of exiting non-core businesses and focusing its capital spends on emerging technologies and products, it added.

The scheme of arrangement will be subject to the approval of Sebi, RBI, and NCLT amongst others and all shareholders and creditors of TCL and TMFL and will take 9-12 months to complete, Tata Motors said.