Promoters of Bank of Rajasthan seek more time

They are under Sebi and RBI scrutiny for various violations.

The promoters of Bank of Rajasthan (BoR), who are under the scrutiny of both the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi), have sought more time to file objections to the capital markets regulator’s order charging them with violations of a number of rules.

“We have asked Sebi to give us two more months for replying to the order,” said Pravin K Tayal, founder-promoter of the Jaipur-based private sector lender.

In an order dated March 8, 2010, the capital markets regulator had barred 100 entities associated with the bank’s promoters from dealing in securities. The entities had till March 29 to file their objections to the order.

On the delay, Tayal said his reply to the regulator was not yet ready as he was still in the process of framing it.

According to Sebi, these 100 entities had connived with the promoters to mislead investors about the shareholding pattern of the bank. “While the promoters apparently conveyed the impression that they were reducing their shareholding… On the contrary, they had actually increased their shareholding in a deceptive and fraudulent manner with the active connivance of others,” said the order.

While the bank, controlled by the Tayal group, declared a reduction in the promoters’ holding from 44.18 per cent in June 2007 to 28.61 per cent in December 2009, this was found to be “clearly false” by Sebi.

The promoters’ holding along with their front entities actually increased from 44.71 per cent in June 2007 to 60 per cent in March 2008. It stood at 55.01 per cent in December 2009. While such increases in the normal course trigger an open offer, the bank flouted Sebi norms and made no disclosures about the acquisition.

“…it is prima facie established that the entities had acted in concert with the promoters of BoR with the common objective of substantially acquiring shares/ voting rights in BoR, indirectly for the promoters, for the purposes of camouflaging their acquisition,” said Sebi.

Earlier, RBI had ordered a special audit of the books of BoR, after it found lapses in “corporate governance” and “disclosure norms”.

In February, RBI had slapped a fine of Rs 25 lakh on the bank following a string of violations. The banking regulator pulled up the lender for violations of property transactions, anti-money laundering norms, irregularities in the conduct of accounts of a corporate group and failure to provide certain documents sought by RBI.