IGF to move regulators over UWB merger
The Investor Grievance Forum (IGF) will approach the Reserve Bank of India, Sebi and the finance ministry to demand an explanation as to why IDBI was picked to acquire United Western Bank.
It will also seek clarifications as to why trading on UWB shares was not barred even after the bank was put under moratorium. The forum will ask the basis on which the price of Rs 28 a share was arrived for buying out the UWB shareholders.
Addressing a gathering of reporters on Tuesday, Kirit Somaiya, IGF’s president, said, “Employees of United Western Bank (UWB) and small investors together account for nearly 32% of the total shareholding pattern. Since the RBI imposed a moratorium on the bank, nearly 48,000 small investors sold 1.48 crore UWB shares at a price ranging anywhere between Rs 5-15, in anticipation that there would be a repeat of the Global Trust Bank fiasco.”
Interestingly, Mr Somaiya had earlier announced that the amalgamation was the first of its kind to have protected the interests of both the depositors and shareholders, with each shareholder being offered a value of Rs 28 a share.
In his proposed interaction with the regulatory and governmental authorities, Mr Somaiya plans to raise the issue as to why be there no suspension of trading on the bank’s shares, following the moratorium announcement.
He spoke of the possibility of insider trading, wherein few large traders who had an idea of the likely valuation, purchased these shares from small investors.
In view of the fact that the RBI has given time till September 27, ’06 for submitting suggestions and objections towards the amalgamation scheme, IGF plans to ask the central bank the exact reason for choosing IDBI among 17 applicants to takeover UWB, without having declared a list of short listed candidates
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