Bank of Rajasthan

   SHARES of Bank of Rajasthan fell 7% in heavy trade on Tuesday after a Sebi order late on Monday evening barred the major shareholders of the private bank and a few group companies from dealing in the stock market till further notice. The Tayals — one of the biggest shareholders of BoR — have been accused of raising their stake in the bank through front companies, while trying to give an impression that they have been reducing their holdings to comply with the Reserve Bank of India (RBI) norms on ownership in private banks. The stock closed at Rs 62, down 7% over the previous close, with 41 lakh shares — four times the previous day's volume — changing hands on the NSE alone. 

   The regulator has banned 118 entities in all, including Pravin Kumar Tayal, the former chairman of BoR, Saurabh Pravin Tayal, Navin Kumar Tayal, Sanjay Kumar Tayal, promoter entities, and persons who it says fronted for them. 

   The Sebi probe followed a reference from RBI which had spotted irregularities during its annual financial inspection of BoR. The central bank provided details of movement of funds from the Tayal Group to certain corporates suspected of being fronts of the group. 

   According to the Sebi order, the shareholding pattern of BoR (as disclosed to stock exchanges) showed that the promoters had reduced their stake to 28.61% from 44.17% between June 2007 and December 2009. 

   "On the contrary, they (the promoters) had actually increased their shareholding in a deceptive and fraudulent manner with the active connivance of others. The holding of the promoters (controlled by the Tayal Group) along with their front entities, had actually increased from 44.71% as at quarter-ending June 2007 to 60% as at quarter-ending March 2008 and stood at 55.01% as at quarter-ending December 2009," said the Sebi order, adding that no disclosures of these acquisitions were made to the stock exchanges. 

   The promoters and Tayal Group entities had made fund transfers to a string of finance companies which had a common director by the name of Girish Yadav, so that these entities could purchase BoR shares from the open market. Later on, the Yadav group entities made off-market transfers to a chain of Silvassa-based entities, controlled by the promoters of BoR. 

   "These Silvassa entities are located at addresses that are offices and manufacturing facilities of various other Tayal Group companies. Thus, the Yadav group and Silvassa group were acting in concert with the promoters of BoR to disguise the actual stake of the Tayal Group in BoR," said the Sebi order. 

   The order said there was sufficient evidence prima facie to indicate fraud in the dealing of shares by the promoters of Bank of Rajasthan.