The board of directors of Tata Finance, which met on Friday, has approved a proposal to issue equity shares of Rs 10 each for an aggregate value of Rs 300 crore (Rs 3 billion) on preferential basis to Tata Sons and Tata Industries at a price to be determined in accordance with Sebi norms.

This was announced by the company in a release issued to the NSE on Friday.

The proposed issue of shares would be subject to approval of shareholders and regulatory authorities, the release added.

The allotment is being done to convert interest-free advances given by Tata Sons and Tata Industries to equity to meet the minimum Net Owned Funds (NoF) requirements under Section 45(1A) of the RBI Act, 1934 and capital adequacy ratio as stipulated under Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998, the release said.