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| Geojit exits commodity broking biz, gets Rs 40cr |
| Press Trust of India / Mumbai Jan 02, 2009, 15:37 IST |
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Stock broking and commodities trading firm Geojit Financial today said it has discontinued its commodity broking business and has received a compensation of Rs 40 crore from BNP Paribas.
The company has got the compensation for surrendering its commodity broking memberships, pursuant to a prior agreement with French bank BNP Paribas, which holds 27% in the Kerala-based brokerage firm.
The company today informed the Bombay Stock Exchange about the compensation and surrendering of its memberships to various commodity exchanges after receipt of regulatory approvals.
Last year, BNP Paribas, which had acquired 27% in the company, had faced regulatory problem due to Geojit's commodity broking business, but later on the management agreed to exit the business.
In return, BNP had agreed to compensate Geojit and its shareholders.
BNP, had bought 27% equity shares in Geojit at Rs 26 a share, aggregating Rs 207 crore, in March 2007.
But the French bank could not go ahead with the mandatory open offer pending clearance from the Reserve Bank of India (RBI).
RBI had refused to clear the proposal since Geojit was engaged in commodity trading and as per the prevailing rules, banks in India are not allowed to enter this business.
And capital market regulator Sebi refused to clear the open offer without RBI approval as BNP is a foreign bank operating in India.
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