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RBI seeks proceedings against Bank of Rajasthan defaulters

Janaki Krishnan, Rakesh P Sharma & Pradeep Gooptu

The Reserve Bank of India has directed the Bank of Rajasthan to institute "criminal and civil proceedings urgently against all recalcitrant defaulters, including the Bangur group", for recovery of dues.

The Bangurs were the former promoters of the bank. The RBI has asked the bank to check the legal aspects of the action.

Sources at Bank of Rajasthan said the Bangur group owed around Rs 3 billion to the bank, which were advanced as loans. Taking into account the interest over the last seven years, the Bangurs have to pay over Rs 6 billion.

When contacted, Keshav Bangur told Business Standard: "The entire thing is fabricated. I do not owe Bank of Rajasthan any money. This will be proved if one goes through the bank's annual accounts and studies the non-performing assets. This campaign has been launched against me after the Securities and Exchange Board of India ruled in my favour, directing the return of the pledged shares of Bank of Rajasthan to me once I pay off the Tayals, to whom the shares are pledged."

In its communication, the RBI stressed recovering the amount from the Bangur group. "The bank's efforts in recovery of NPAs, in particular from the Bangur group, are far from satisfactory, jeopardising the financial position of the bank," it said.

The RBI has directed Bank of Rajasthan to place the letter before the board of directors "for initiating appropriate measures urgently". It demanded that "the progress in initiating criminal proceedings, particularly against the Bangur group of companies, be intimated" to the central bank periodically.

Pravin Kumar Tayal, chairman of Bank of Rajasthan, refused to specify the course of action to be pursued in the case of the Bangur group. He said from financial year 1999-2000 to 2001-02, the bank had recovered Rs 1.5 billion from its major corporate defaulters.

The RBI move did not surprise the banking industry because the central bank was not happy with the way the Bangurs ran Bank of Rajasthan. The present management of the Tayals had the RBI's support to take over Bank of Rajasthan. "It is natural that the RBI wants the bank to clean up its balance sheet at the earliest," sources said.

Various options are being explored by Bank of Rajasthan to recover the dues, including attaching the Bangur group's properties and taking possession of assets such as securities owned by the Bangurs. The BoR has filed 185 cases against the Bangurs in Delhi, Jaipur and Kolkata for recovery of dues.

For 2001-2002, the bank had set a target of recovering Rs 700 million in NPAs from corporate borrowers but was able to recover only Rs 250 million.

50 bank shareholders get income tax notices

The income tax department has served notices to 50 shareholders of the Bank of Rajasthan, asking them to declare their sources of funds. The notices were served in April. Monday was the last day for the shareholders to file their responses to the authorities.

Some of the shareholders have filed an affidavit with the income tax department, stating that the shares, which are shown to be in their names in the record books, are not owned by them.

When contacted, Bank of Rajasthan chairman, P K Tayal, told Business Standard: "I have not received any such notice from the income tax authorities. My accounts were cleared last year itself." He, however, said it was possible that other shareholders could have received the notices.

The current promoters, the Tayal group, are the largest shareholders in the bank, with a stake of more than 37 per cent, according to the bank's last audited balance sheet of 2000-2001.

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