Smaller rival Non-Standard Finance, led by ex-Provident boss John van Kuffeler, announced on Friday that it had made a bid for Provident, which has run into trouble with regulators worried about the rates it charges on loans.

"The board considers that this hostile offer represents an irresponsible approach in the context of a financially regulated business which is recovering from a period of substantial instability," Provident said in a statement.

In response, NSF said Provident lacked clarity on what steps it would take to address the "significant financial, operational and cultural challenges" it faces.

Its offer "would deliver significantly greater benefits for both Provident shareholders and NSF shareholders than either Provident or NSF would otherwise be able to deliver on their own," NSF said in a statement.

Provident and NSF provide short-term loans to consumers who might otherwise struggle to borrow from more mainstream banks. British lawmakers want to rein in the high interest rates such firms charge on borrowing by often vulnerable people.

Provident's share price has tumbled 75 percent in the last two years, hit by a botched reorganisation of its home credit business which led to profit warnings, the departure of its CEO, the suspension of dividends and regulatory issues.

"I'll be the first to admit that we maybe wandered off the path, but we're right back to it," Provident Chief Executive Malcolm Le May told Reuters in a phone interview.

"All I am saying is ... there must be a better solution in some shape or form than what it (NSF) has put on the table, which is basically a rather ill thought out plan," he said.

Provident's shares were up 1.1 percent on Monday after gaining 15 percent on Friday on news of the bid.

NSF had proposed simplifying Provident, selling two units and demerging Provident's home credit business and its Loans at Home unit.

Provident, however, said the disposals did not make economic sense and a demerger of Loans at Home would result in a "subscale listed company".

When asked if Provident would be open to another takeover offer with better terms, Le May said: "I am open minded to all scenarios that I think will maximise shareholder value."

Provident Financial investo
rs look for respite after botched reorganisation:

NSF, founded only five years ago by van Kuffeler, has a market value of £210 million, but has the backing of several Provident shareholders including Neil Woodford, Invesco and Marathon for its proposed turnaround plan.

Le May said Provident had not engaged with the investors, but had instead highlighted its rationale in its statement on Monday, hoping some of the shareholders might change their minds.

Provident, established in 1880 and based in the northern English city of Bradford, also said the offer could have a negative and destabilising impact on its stakeholders.

Analysts said NSF's offer was the best option for Provident.

"Given the events of the past two years, we believe the merger with NSF is the best rescue PFG shareholders could hope for," Canaccord Genuity analysts said.

Provident also postponed the announcement of its full-year results due on Feb 28 until March 13 citing the current circumstances.

"Provident's decision today to delay the announcement of their full year results speaks louder than anything we could say about them, as does their failure to mention any plan for restoring shareholder value," Kuffeler said.

NSF's shares were down 4.9 percent, after surging 16.5 percent on Friday.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Susan Fenton and Jason Neely)

By Noor Zainab Hussain