Tayals not promoters of BoR, says CEO

Seeking to distance itself from a controversy over Tayal Group's shareholding in it, Bank of Rajasthan (BoR) today said the Tayals were technically not its promoters.

The clarification came a day after market regulator Securities and Exchange Board of India (Sebi) barred Tayal group of entities and others from trading in securities in any form till further directions.

Legal opinion has been obtained that they are not the promoters...The bank doesn't consider them as its promoters...They are just dominant shareholders in the bank," BoR's Managing Director & CEO G Padmanabhan said.

Sebi was peeved that Tayals had increased their shareholding in the private sector lender from 44.71 per cent in the quarter ended June 2007 to 55.01 per cent in the October-December quarter 2009, although they had claimed they were actually divesting stake.

 

The bank said it was still studying the order issued by the market regulator late last night and would come up with appropriate response later, Padmanabhan said.

The Sebi action against Tayal group itself came after the Reserve Bank appointed Deloitte Haskins & Sells to conduct a special audit of BoR's accounts, suspecting violation of operational norms by the lender, including transparency in lending.

The Central Bank had also imposed a Rs 25-lakh fine on the bank alleging violation of a host of norms. Referring to the Sebi action, Padmanabhan said, "From the bank's perspective, these are two different things. They (Tayal Group) have no control on the day-to-day activities of the bank."

The market regulator also said that while the promoters apparently conveyed the impression that they were reducing their shareholding, they did not, in fact, dilute their controlling stake in BoR.

"On the contrary, they had actually increased their shareholding in a deceptive and fraudulent manner with the active connivance of others," the Sebi statement said.

Barring entities including the Tayals from accessing the share market, Sebi said, "It is imperative that the groups of entities including the promoters, the other Tayal entities, the Yadav Group and the Silvassa Group restrained from dealing in the securities markets till further directions."

Started in 1943, Bank of Rajasthan has a network of 463 branches across the country and over 20-lakh customers.

For the quarter ended December 31, 2009, the net profit of the bank declined to Rs 44.7-crore as against Rs 49.21 crore in the year-ago period while its total income dropped to Rs 373.7-crore from Rs 419.8-crore.