Mumbai:The capital market regulator, Securities and Exchange Board of India late on Monday evening banned 100 entities related to the promoters of Bank of Rajasthan from dealing in the securities market. These entities allegedly violated a number of Sebi rules, including the takeover norms and indulged in fraudulent trade practices.
Sebi said that these 100 entities had connived the promoters of BoR to mislead investors about the shareholding pattern of the bank. “While the promoters apparently conveyed the impression that they were reducing their shareholding… Indeed on the contrary they had actually increased their shareholding in a deceptive and fraudulent manner with the active connivance of others,” said Sebi.
While the bank, controlled by the Tayal group, had been declaring a reduction in promoter holding from 44.18% in June 2007 to 28.61% in December 2009, this was found to be “clearly false” by Sebi.
The holding of the promoters along with their front entities, had actually increased from 44.71% in June 2007 to 60% in March 2008 and stood at 55.01% in December 2009. While such increasse triggers an open offer, the bank skipped the 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,” added Sebi.
Earlier, Reserve Bank of India had ordered a special audit of the books of Bank of Rajasthan Ltd. after it found lapses in ”corporate governance” and ”disclosure norms”, driving down shares of the bank.
Last month, RBI had imposed a Rs 25 lakh fine on the private sector lender after it found lapses in corporate governance procedures and disclosure in the bank’s third quarter results.
In a Dow Jones report dated 8 March, G Padmanabhan, managing director and CEO of BoR said the bank doesn’t have a credit committee, which is necessary for effective credit dispensation.
”The process (of special audit) is already on and the bank will fully cooperate in it,” Padmanabhan said according to the Dow Jones report.