Under pressure from the Reserve Bank of India, promoters of private banks are bringing down their shareholdings. Promoters of Bank of Rajasthan (BoR), the Tayals, who have held on to their stake for years, are finally giving in and will bring down their holding which currently stands at 44%.
The promoter of another old private bank Dhanalakshmi Bank has also started offloading his stake to meet RBI guidelines. The new generation IndusInd Bank, which is promoted by the Hindujas, is also in talks with the RBI on the issue.
The central bank has been putting pressure on private sector bank promoters to bring down their shareholding to the requisite 10%. In the case of BoR, the bank will now proceed with a preferential issue of up to 10% every quarter. In the first tranche, the bank is likely to place slightly below 5% stake to BNP Paribas for around Rs 150 per share.
Bank officials are said to be in talks with a host of foreign banks and funds for preferential issuance.
The bank scrip was up 5.34% to Rs 120.25 on the BSE. Unlike in the case of Dhanalakshmi Bank, the BoR’s move for a preferential issue would help the bank to raise fresh capital. Dhanalakshmi bank promoter P Raja Mohan Rao
sold 17% of his stake from end July in the secondary market.
The net worth of the bank is below the mandated Rs 300 crore. BoR is on a slightly better wicket as its net worth is currently at Rs 426.26 crore. The bank has a CAR of 11.9%.
In July, RBI has asked banks, which had the largest single-promoter holding to submit a road map on dilution of stake in the bank. Foreign promoter shareholding of IndusInd Bank is at 28.45%. The promoter shareholding came down marginally from 31.34% on the back of a GDR issue by the bank.
Among corporates, Ashok Leyland owns a 9.92% stake in the bank. When contacted bank’s MD Bhaskar Ghose said, “It’s a matter of an ongoing discussion with RBI.” Lord Krishna Bank, another old private sector bank where promoters held a 69% stake, was taken over by Centurion Bank of Punjab on the back of the RBI pressure.
Promoters of both BoR and Dhanalakshmi Bank have been trying to evade the RBI pressure. In fact, one of the bank promoters went back to RBI to say that the shareholding in the bank is held by the family over which he does not have any control. In the case of Dhanalakshmi Bank, RBI stipulated that the promoter, P Raja Mohan Rao, has to lower his stake before allowing a rights issue.
Incidentally, RBI has also recently rejected PK Tayal’s candidature for the post of chairman at BoR. RBI has yet to reply on the candidature of SK Tayal. Bank’s current MD BM Sharma’s tenure comes to an end in November.
The bank has already started scouting for the new MD, and around 15 bankers mainly retired public sector bankers have applied for the post.
Source: Economic Times