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No beating about the bush.
A day after market regulator SEBI barred the Tayal group of entities and others from trading in securities and RBI appointed Deloitte Haskins & Sells to conduct a special audit, the Bank is trying to distance itself from the Tayal Group
Seeking to distance itself from a controversy over the Tayal Group's shareholding in it, Bank of Rajasthan (BoR) on Tuesday said the Tayals were technically not its promoters.
The clarification came a day after market regulator Securities and Exchange Board of India (SEBI) barred the 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," Bank of Rajasthan's managing director and chief executive officer (CEO) G Padmanabhan told PTI.
SEBI was peeved that the Tayals had increased their shareholding in the private sector lender from 44.71% in the quarter ended June 2007 to 55.01% in the October-December quarter 2009, although they had claimed they were actually divesting stake.
The Bank said that it was still studying the order issued by the market regulator late last night and would come up with an appropriate response later, Mr Padmanabhan said.
The SEBI action against the Tayal Group itself came after the Reserve Bank of India (RBI) 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 RBI had also imposed a Rs25-lakh fine on the bank alleging violation of a host of norms.
Referring to the SEBI action, Mr Padmanabhan said, "From the bank's perspective these are two different things. They (the 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 Bank of Rajasthan.
"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 (are) 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 2009, BoR's net profit declined to Rs44.70 crore as against Rs49.20 crore in the year-ago period while its total income dropped to Rs373.70 crore from Rs419.80 crore.