Essar Has Given Up The Idea Of Owning A Bank: Ruia

The Essar group has given up on the idea of owning a bank, said Sashi Ruia, chairman, Essar group while referring to the jinxed takeover of the Tamilnad Mercantile Bank, based in Tuticorin.

Ruia stated that he had arrived at the decision because of the cost involved.

After waiting for more than a couple of years for control of the bank, the Essar group has finally decided that it is not worth the wait.

Legal costs only make the proposition more unviable, points out a company source.

The Ruias had pumped in close to Rs 50 crore to buy up a 65 per cent stake in the prosperous Tamilnad Mercantile Bank two years back but are yet to either get the bank or the money.

 

All attempts made by the Nadar community to buyback the stake from the Essars have also proved futile.

Shares of the bank, that Essar had paid for, are yet to be transferred in their name and have now been sold to Shivsankaran of Sterling Computers.

However, this is subject to RBI approval as earlier the apex bank had disallowed the Essar groups takeover of the bank.

The transfer of shares from the Nadar promoters has been caught up in legal battles although the group has paid for more than 60 per cent of the banks equity.

When the Nadar community reneged on the deal, Essar took the matter to court and even got the Company Law Board to approve of the takeover.

But when the matter was forwarded to Reserve Bank of India for its approval, the Central

bank decided not to give controlling stake to the group because of its status as a large industrial house.

The bank transfer has attained political overtones as the Tamil Nadu chief minister K Karunanidhi was roped in by the Nadar community to resolve the issue with the Essars.

It is in this context that Sashi Ruias statement to the press that the group is not looking for new business in Tamil Nadu is considered significant.

The next few years will be a period of consolidation for the group as a whole as we already have our hands full, he added.