The Hindu : RBI sets terms to clear TMB cobweb

Online edition of India's National Newspaper
Saturday, Jan 04, 2003

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Business

RBI sets terms to clear TMB cobweb

By K. T. Jagannathan

CHENNAI JAN. 3. The Reserve Bank of India appears to be keen on ending the long drawn out share transfer controversy that has forced the Tuticorin-based Tamilnad Mercantile Bank (TMB) to put off the annual shareholders' meeting for many years now.

The apex bank has reportedly suggested to the TMB that it could consider giving its nod for share transfer provided certain conditions were followed.

Enthused by this favourable indication from the RBI, the Nadar Mahajana Bank Shares Investors Forum, engaged in restoring the lost bank to the community, has initiated steps to facilitate transfer of shares from one of the companies that is holding a part of the disputed shares of TMB to individual community members who have paid for buying these shares.

The Forum is keen that the disputed shares held by Chennai Properties and Investments Ltd., one of the seven companies belonging to C. Sivasankaran of the Sterling Group, are transferred to individual community members who have paid for buying them. Chennai Properties is reportedly holding 24,502 shares. Following the appeal made by the Forum, about 7,756 members of the community have paid money to buy these shares. The move to fully complete share transfer from one of the seven companies to community members in the beginning is in line with the stipulation laid out for giving its clearance.

The RBI, it is learnt, has set three terms for its approval. They are: Transfer deeds for transfer of shares both to companies and individuals should be tabled in tandem; shares that are being transferred to the individuals alone can be transferred to companies. At no point, there can be any residual shares remain in the names of companies out of the shares transferred; and a letter of undertaking by the seven firms stating that they are lodging these shares only for immediate transfer to individuals and that they will not ask for transfer of shares to remain in the names of the companies thereafter.

Sources said all paper works related to the transfer of disputed shares held by Chennai Properties were being processed and expected the proposal to be placed before the board of the bank by the end of this month. They expressed optimism that once the share transfer in this instance was carried out smoothly, the community members would come forward to contribute further to the Forum's bid to take repossession of TMB. It, however, remains to be seen how the board of the bank, comprising some of those who had originally sold their shares triggering the current impasse, would view the Forum's move.

The TMB, it may be recalled, had hit national headlines in the middle of 1990s when the Ruias of the Essar Group managed to acquire about 67 per cent shares in the bank, cashing in on the internecine feud between the three promoter groups. The RBI, however, had put paid to the bank dreams of the Ruias and refused to give its nod for the transfer of shares. Mr. Sivasankaran came into the picture when he wriggled the Ruias out of the mess and bought these shares (rather the firms that bought these shares) in lieu of payment due to him for selling Sterling Cellular to the Essar Group. The entry of the Sterling Group had only triggered further emotions within the community and united them to fight for the restoration of TMB.

With the share imbroglio unresolved yet, the bank has not been in a position to convene the AGM. An upset Company Law Board is reportedly contemplating further course of action against the recalcitrant TMB whose directors are appearing to pull in different directions to serve their own constituencies.

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