In a move that may pave the way for the long-pending IPO of RBL Bank, regulator Sebi has agreed to settle an outstanding case against the lender for alleged violation of disclosure norms with regard to an earlier issuance of shares to select investors for over Rs 600 crore.
The settlement involves payment of Rs 47.6 lakh towards 'monetary settlement charges', as also a commitment by the bank that it would give an exit opportunity in its IPO to the investors to whom shares were issued earlier in rights issues.
The exit offer would need to ensure that the shareholding of an individual investor does not exceed 5 per cent as per RBI guidelines. The offer price need to be a higher amount of the allotment price plus interest at the rate of 15 per cent, or a fair value estimated by RBL of Rs 90 each.
The shareholders would be given 21 days to decide on whether to sell their shares or continue to remain invested.
While considering the settlement offer, Sebi said, it took into account the factors that the alleged violation was disclosed voluntarily by the bank and there was no outstanding regulatory concern from the banking regulator RBI.
It also said that there were no pending complaints from any regulator or any investor, while RBL Bank and its top executives were willing to grant the exit opportunity.
Further, the regulator noted that the alleged violations occured due to the equity share allotments which were made by the bank to comply with the minimum capital/ net worth requirements of RBI.
Accepting the settlement offer under its consent mechanism, the Securities and Exchange Board of India (Sebi) said it is disposing the proceedings initiated against RBL bank.
Under the consent mechanism, entities can seek to settle cases with the regulator after payment of certain charges and and other expenses without admission of guilt.
As Sebi's further proceedings were underway, RBL bank, in November last year, had proposed a settlement offer to settle proceedings by Sebi for alleged violations of Disclosure and Investor Protection Regulations as also the Issue of Capital and Disclosure Regulations due to certain rights issues and preferential allotments made by the bank.
As per show-cause notices issued earlier by Sebi to the bank, it had made four preferential allotments of 18.19 lakh shares to a total of 4,892 investors to raise Rs 18.18 crore.
Besides, it had raised Rs 601.12 crore from 12,285 investors through issuance of shares on rights basis in five instances.
The number of investors in each rights issues were in excess of 49, thus requiring them to follow Sebi norms on issue of capital and disclosure requirements.
