Sources close to the development said Geojit's commodities trading business contributes about 8 per cent to its revenue and forms a significant part of its business. Both the parties will be mutually cooperating to resolve the issue, they added.
The plan is to hive off the commodities business into a separate company, for which BNP Paribas will be compensating Geojit so that the interest of all the other minority shareholders' is protected. However, because of the recent ban on some of the commodity futures, negotiations are very tough, sources said.
If the French financial services group fails to secure RBI's approval, it will have to pare down its stake to 15 per cent and thereby avoid the mandatory open offer.
UTI Securities (now Standard Chartered STCI Capital Markets) also had to hive off its commodities broking business before the central bank could clear Standard Chartered Bank's acquisition of a 49 per cent stake in it from Securities Trading Corporation of India (STC) last year. However, UTI Securities' commodities broking business contributed less than 1 per cent to its revenue.
Geojit Financial Managing Director C J George said, "We are considering various options to solve this issue so that BNP Paribas can get permission from RBI for the pending open offer."
BNP Paribas officials declined to comment.
In 2006, the French bank had announced its plans to enter the booming Indian retail stock broking business and bought the stake in Geojit Financial Services for Rs 207 crore.
In May 2007, it was supposed to make the mandatory open offer for an additional 20 per cent stake in the broking firm. BNP Paribas could not go ahead with the open offer as the Securities and Exchange Board of India (Sebi) had referred the matter to RBI, which does not want banks to be involved in the commodities business.
