The Rs 27.5-crore issue was grossly under-subscribed to the tune of Rs 20 crore when Mr P Rajamohan Rao, a director of the bank, and two of his associates stepped in to lap up the unsubscribed portion of the issue by shelling out nearly Rs 20 crore. Of the 1.83-crore rights shares issued, Mr Rao and his associates bagged nearly 1.33 crore shares. As per the rights issue, each share of Rs 10 was issued at a premium of Rs five in March. The appropriation made in respect of the rights shares pending allotment was Rs 3.24 crore, according to bank sources. The post issue stake of Mr Rao and his associates in the bank is said to have gone up to over 37 per cent.
However, sources told The Financial Express that the RBI is yet to approve the share allotment to Mr Rao and his associates. Bank chairman Mr TM Venkataraman when contacted, said that he was confident of the approval and it would come in soon. The delay, though it has been over four months since the rights issue was concluded, was normal, he added.
However, banking sources said that in the wake of the bank being under Sebi’s scrutiny, the RBI may take a relook at the entire share transfer issue.
Sebi has been looking into the July 29 bank board decision to pay dividend to the subscribers of the issue, following complaints from some shareholders. It was decided to pay dividend of Rs 1.50 per equity share for both the existing shares and the rights shares. Going by this norm, Mr Rajamohan and associates could make Rs two crore by way of dividend and Rs eight crore by way of capital appreciation.
The bank says it went in for the dividend payout route as Sebi had rejected its proposal for a separate international security identification number (ISIN) for the rights shares.