The promoters of Bank of Rajasthan are facing a double-edged regulatory probe, with indications that the role of independent directors could come in for strong scrutiny.
The Securities and Exchange Board of India (SEBI) has restrained the promoters of Bank of Rajasthan from dealing in the securities market following incorrect disclosures on their shareholding in the bank and charges of concealing real holdings.
This came on the heels of the Reserve Bank ordering a special audit by Deloitte, Haskins & Sells into “certain aspects” of the bank.
SEBI on Monday passed an order retraining the promoter Tayal family and other entities related to them, the Yadav Group and Silvassa Group (involving a total of 100 entities) from dealing in the securities market.
Barely 10 days ago, the RBI imposed a penalty of Rs 25 lakh on the bank on violations of its regulations on acquiring immovable properties and not following Know Your Customer norms concerning dealings with a corporate group.
“We are in the process of looking into certain aspects of the bank,” an RBI official told Hindustan TImes.
Pravin Kumar Tayal, one of the promoters of Bank of Rajasthan told Hindustan Times that there was only a communication gap that needed to be set right.
“There is some confusion and we are confident that we will be able to convince and clear the misunderstanding in the mind of the regulator,” said Tayal. “The comfort of the regulator is important and we would take them in full confidence.”
Acting on a reference from the RBI that provided details of movement of funds from Tayal Group to certain domestic corporates (which were termed as front companies of Tayal Group), SEB probed the promoters’ holdings in the bank.
The market regulator found that the promoters conveyed the impression that they were reducing their shareholdings, while not doing so.
"On the contrary, they had actually increased their shareholding in a deceptive and fraudulent manner with the active connivance of others," said the SEBI order.
The order added that the actual shareholding of promoters and their connected entities at times was higher, and on first impression violated SEBI’s permissible limits of stakeholding.
“It is imperative that the groups of entities including the Promoters, the other Tayal entities, the Yadav Group and the Silvassa group, be restrained from dealing in the securities market till further directions,” the order said.