The proposed rights issue is aimed at improving the private bank's capital adequacy ratio from the current 2.5 per cent to 7 per cent. The bank currently has a paid up capital of Rs 17.93 crore. According to sources, Tayals are finding it difficult to put their act together for streamlining the operations of the bank. Although the Bank of Rajasthan board had approved the appointment of P K Tayal as the chairman of at its meeting on December 8, 1998, the Reserve Bank of India is yet to its approval.

Technically, the bank is headless at present and the delay in RBI givingits nod is affecting the bank's future prospects. In fact, the stock market had welcomed the cash-rich Tayals taking over the management of the bank and the stock shot up to a high of Rs 76 in September 1998. The stock rallied as the market was expecting a change of management at the bank and Tayals taking over the management would help the bank make a turnaround.

According sources in the bank, the total equity holding of Tayals is less than two per cent. And if the bank faces any shortfall in the rights issue subscription, Tayals could increase their stake upto 7 per cent. They had already made their intention very clear to pick up the unsubcribed portion of the rights issue. As a result, Tayals will emerge as the single largest equity holders in the bank. There is also a confusion regarding Bangurs equity holding in the bank who had taken over the bank some years ago from Mansinghkas. However, according banking sources, Bangurs do not hold any stake in the bank after they had struck a deal with Tayalssome months back. According to sources, Bangurs had pledged their shares of the bank against advances.

The record date for the rights issue has been fixed as on February 9. The bank's ex-right price is Rs 21.25. Tayals have put in Rs 20 crore in the escrow account for picking up additional stake in the bank in case of an undersubscription.

According to the bank's earlier plans, the rights issue would have been over by March end and if Sebi further delays its approval, the fresh equity issue may face more delays. The bank may still come out with the issue on March 31, if Sebi gives its clearance by February 20, according to sources.

Bank of Rajasthan has received a major drubbing on bourses in the past 20 trading sessions (cum-right price) with the bank declaring a net loss of Rs 49 crore for the quarter ended December 31. The scrip has shed 92 per cent, from Rs 40.3 to Rs 21. The stock had started its downward journey since mid-January. The share peaked Rs 40 in the begining of January due to a changeof management at the bank coupled with its rights announcement at a steep discount to the market price. Besides the bad results, some profit booking also aided the drubbing.

The current drubbing has narrowed down the market premium to the offer price of Rs 15. For the nine-month period ended December 31, 1998, the bank has recorded a net loss of Rs 44.25 crore and total accumulated losses shot up to Rs 132 crore.