Indian Banks

Private sector lender Bank of Rajasthan (BoR), which is neck-deep in regulatory troubles, is understood to have identified two merchant bankers to advise it on the proposed Rs 250-crore qualified institutional placement (QIP) issue.

The troubled bank was talking to a host of merchant bankers, including SBI Capital and Enam Securities among others to advise it on the matter and would soon appoint two of them to speed up the fund-raising process through QIP, a top bank official said today. “We are talking to a few of them. We would select two of them as advisors for the issue and a formal appointment will follow soon. This would speed up the fund-raising process,” Bank of Rajasthan (BoR) Executive Director KK Sharma said here today.

A few days after RBI ordered a special audit of the BoR books and Sebi banned 100-odd related entities of the promoter Tayal family from accessing the market, the bank sought the shareholders’ permission to go in for a QIP issue.

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The Reserve Bank of India (RBI) has imposed an Rs 25-lakh fine on Jaipur-based private sector lender Bank of Rajasthan (BoR) for violating regulations on five counts.

The central bank has faulted the bank on various grounds, including violating RBI directions on acquisition of immovable property, deletion of records in the bank’s IT system, non-adherence to know-your-customer (KYC) and anti-money laundering (AML) norms, irregularities in the conduct of accounts for certain corporate groups and the bank’s failure to provide certain documents to RBI and misrepresenting that these documents were not available.

The central bank had issued a show-cause notice to the bank. After reviewing replies, it came to the conclusion that the violations were substantial which warranted an imposition of penalty.

G Padmanabhan, the RBI-appointed chief executive of BoR, said the issues pertained to corporate governance concerns for the period 2004-07.

In view of these concerns, the central bank appointed a chief executive, placed two RBI officers along with two independent directors (as RBI nominee) on the bank’s board.

The bank has reviewed the business model of the bank and has decided to put special emphasis on the retail segment instead of the earlier emphasis on large-ticket loans.

The bank had a network of 466 branches which was not being leveraged, Padmanabhan said. After making amends to the business practices, the bank’s exposure to the real estate segment is now within norms.

On the recent Icra downgrade of its Tier-II bonds, he explained that it was partly due to not making provisions for wage revisions, as was the case with most other banks. “Now our liability has crystalised and we have to make provision for wage revision,” he said.

The rating agency has downgraded the bank’s Rs 220-crore Lower Tier-II Bonds from LA- to LBBB+. It also downgraded the LBBB+ rating assigned to the Rs 62-crore Upper Tier-II bonds to LBBB. The long-term ratings continue with a negative outlook.

The rating downgrades reflect deterioration in the quality of the lender’s advances portfolio, which reported a higher-than-expected restructuring, its relatively higher exposure to sensitive sector such as real estate and textile and low net profitability over the last few quarters.

With a provision of Rs 38 crore for non-performing assets, the private bank reported a net loss before tax of Rs 67 crore in the third quarter as against a profit of Rs 74 crore in the previous comparable quarter.

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The Bank Of Rajasthan Ltd. was established at Udaipur, the city of lakes in Rajasthan on the auspicious day of Akshya Tritiya on  May 8, 1943. The credit for the birth of the Bank goes to, the then finance minister of the erst-while Mewar Government, late Shri Rai Bahadur P.C. Chatterji, who persuaded The Mansingka brothers of Bhilwara for establishing a joint stock bank with its registered Office at Udaipur.

The Bank was established with an initial capital of Rs.10.00 lacs. Late Seth Shri Govind Ram Seksaria, an eminent Industrialist of the country, was the founder Chairman. The first Broad of Directors comprised such men of eminence as Shri Rai Bahadur Seth Rameshwarlal Ji Duduwala, Seth Shri Subhhag Mal Ji Lodha besides the Mansighka brothers, Seth Shri Pusa Lalji Mansighka and Seth Shri Damodar Lal ji Mansighka. The other members of the board were Major Rajadhiraj Amar Singhji of Banera and the then Accountant General of Mewar, Rai Bahadur lala Sukhdayalji.

In line with the contemporary practice of naming the bank after the location or princely state, the suggested names for the bank were Bank of Mewar State or Bank of Udaipur. The promoters, being very clear in their vision, expressed the view that the word ‘Rajasthan’ will be more advantageous in future for expanding activities in other princely states since under the new constitution grouping of the then local princely states was expected under one umbrella. As now is history, the individual princely states were merged under the final name for the state – Rajasthan. The naming of the bank, The Bank of Rajasthan Ltd., glaringly reflected the foresight of the promoters.

It was set up at Udaipur in 1943 with an initial capital of Rs.10.00 lacs. An eminent Industrialist Late Seth Shri Govind Ram Seksaria was the founder Chairman. It was classified as the Scheduled Bank in 1948. The Bank also established a rural (Gramin) bank Mewar Anchlik Gramin Bank in Udaipur District in Rajasthan on 26th January, 1983.

The bank’s central office is located at Jaipur, while registered office is in Udaipur. Presently the bank has 463 branches.

Popularity: 1% [?]