The Securities and Exchange Board of India (Sebi) has found that the Pravin Tayal group, promoters of Bank of Rajasthan, had violated the Sebi takeover regulations when they increased their holding in the bank beyond 15 per cent without making the mandatory open offer.
Sebi, which is close to finishing its investigation, has found that an open offer was not made by the promoter group when their holding in the bank went beyond the trigger point of 15 per cent. While the promoters are now willing to make an open offer, after getting a 37 per cent stake, the Reserve Bank of India guidelines on private sector banks prohibit them from raising their stake beyond 40 per cent.
Sebi is expected to refer the matter to RBI. Sources said that since the open offer would violate RBI guidelines, the promoter holding would either have to be brought down below the trigger limit of 15 per cent or they would obtain a waiver from RBI.
The markets regulator commenced its investigations into the bank's violations only after investors filed a complaint saying that the promoters had violated the takeover code.
The Tayal group, which had started out with a stake of less than 5 per cent in the bank had gradually increased its stake over the years. The shares pledged by the previous owners, the Calcutta-based Bangur group, passed into Tayal's hands which increased his stake further to around 8 to 8.5 per cent.
The promoters went on to pick up the unsubscribed portion of the bank's rights issue on the Reserve Bank of India's directions and this resulted in their stake going up to more than 37 per cent. At present the promoters' stake in the bank is 37.28 per cent. The bank had made a rights issue for Rs 67 crore in late 1999.
