Manappuram Finance Ltd, which provides loans using gold as collateral, said on Tuesday its

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board will meet on February 10 to discuss a Reserve Bank of India (RBI) notice that prohibited it from accepting or renewing deposits from the public.

The board will also discuss measures to improve its corporate governance at the meeting, the company said in a statement.

Acceptance of deposits by Manappuram Finance or by Manappuram Agro Farms is punishable with imprisonment, the RBI said in a notice on its website last evening.

Manappuram Finance had been accepting deposits from the public and had been issuing deposit receipts in the name of MAGRO, a sole proprietary concern of V.P. Nandakumar, who is Manappuram's executive chairman, the RBI said.

The lender clarified on Tuesday it did not accept any public deposits but was accepting investments through secured non-convertible debentures and subordinate bonds which do not fall under "public deposits.

Shares of Manappuram, which has a market capitalisation of $976 million, opened lower and fell as much as 20% in early trades. At 0537 GMT, the stock was down about 12% at Rs 49.65 in a Mumbai market that was up 0.44%.

The RBI re-categorised Manappuram as a non-deposit taking non-banking financial company in March 2011.

The deposits it held before that had been "mostly repaid, with interest", the company said in the statement.