Essar Takeover Bid For Tn Bank Rejected

Two years ago, the Ruias had paid about Rs 3500 per share to acquire a 70 per cent stake in the bank from the Nadar community.

The transfer was stalled as key figures within the Nadar community tried to buy back the shares to ensure that the bank remained in their control. The Nadars had offered to pay as much as Rs 5,000 per share and even reached a tentative agreement on the buyback with the Ruias, but were unable to stump up the cash.

The apex bank is believed to have cited three reasons for rejecting the transfer of the 70 per cent stake to the Essar group:

 

the overexposure of the Ruias' to loans from the banking industry,

voting rights of a private entity in the banking industry cannot exceed 10 per cent, and No big industrial house can have control over a bank.