The Mahindra & Mahindra (M&M) stock on Thursday plunged nearly 6.40 per cent as investors gave a thumbs down against its move to pick up a 3.53 per cent stake in RBL Bank for Rs 417 crore.

On Wednesday, the homegrown auto firm had announced the purchase of 3.53 per cent in the private sector lender and had also indicated that it was interested in raising its stake to 9.9 per cent — a threshold up to which the Reserve Bank of India (RBI) allows industrial houses to invest in a bank.

According to current RBI regulations, any stake purchase above 5 per cent requires its prior nod.

RBL Bank said in a clarification to the stock exchanges that ``presently, there are no negotiations/events which are required to be reported pursuant to the provisions of Sebi (Listing Obligations and Disclosure Requirements) Regulations, 2015’’, and that it is not aware of any information that has not been announced to the exchanges which could explain the movement of its stock on Wednesday.

The M&M stock on Thursday ended sharply lower on the acquisition. It fell Rs 98.70, or 6.39 per cent, at Rs 1,446.85 on the BSE after dropping 7 per cent to a day’s low of Rs 1,438.

While the RBL Bank stock had gained on Wednesday following the development, it also settled with loss on the clarification. Shares of the bank finished at Rs 232.60, a fall of 2.60 per cent over the last close.

However, M&M’s surprise move has led to questions about the reasons behind the transaction.

The conglomerate has an NBFC — Mahindra & Mahindra Financial Services Ltd — under its fold. The lender had a loan book of Rs 82,770 crore for the period ended March 31. It provides vehicle and tractor finance loans to SMEs apart from being present in the pre-owned car segment.