Bank of Rajasthan promoters banned

Stock market regulator Sebi has banned 100 entities related to the Bank of Rajasthan (BoR), including several members from the Tayal family, the promoters of the bank, from all stock market-related activities. Several of the entities banned are listed companies controlled by the Tayals directly or by their friends and associates. Acting on a reference from the banking regulator Reserve Bank of India (RBI), Sebi conducted an investigation into the shareholding patterns in BoR since 2007. It was found that the entities which were banned were acting in connivance with the Tayals to corner BoR shares. This, in turn, helped the Tayals to disclose a shareholding pattern that conformed to the RBI rules relating to promoters' holding in banks. However, the same shareholding pattern did not adhere to RBI's main idea of separation of control and management. The late-evening order, signed by Sebi's wholetime director K M Abraham, banned entities including Pravin K Tayal, Navin K Tayal, Sanjay K Tayal and Saurabh P Tayal, the main promoters of the bank. Among the listed entities barred from the market were Jaybharat Textiles, Eskay K'n'IT, KSL & Industries, Krishna Lifestyle Technologies and Ashahi Fibres. During RBI's annual financial inspection of BoR, it was found that the bank had made incorrect disclosure regarding the shareholding pattern of the promoter group led by Pravin Tayal and others. Subsequently, Sebi's investigation revealed that between June 2007 and December 2009, the promoters' shareholding in the bank was shown to have dipped from 44.2% to 28.6%. However, as of end-2009, Tayals, along with their associates, actually controlled 55% in the bank. The RBI reference to Sebi had mentioned that though, the promoters of BoR had reported certain reduction in their stake in BoR as mandated by the banking regulator's guidelines of 2005, "it appeared that they had increased their stake in BoR simultaneously through surrogate acquisition." Initial Sebi investigation has proved the 'surrogate' means. The RBI also said there were inter-firm transfers of funds to the accounts of other corporate bodies who had purchased stake in BoR. Following the trails provided by RBI, Sebi investigations found several cases of such inter-firm transfer of funds to help Tayals have control above their disclosed shareholding levels. It was also found, as referred by RBI, that most of the group and associated companies had the same contact details as that of various Tayal group companies, and also "some of the directors were common in the said other corporate bodies and Tayal Group Companies."