There are 17 risk factors - mostly a fallout of the bitter takeover battle for the bank - in the prospectus, including a case against the rights issue itself, SEBI enquiry on the Tayals, failure to achieve previous projections and removal of the Bangurs from directorship of the bank. On the highlights front, it has nothing much to offer except its network of 302 branches.

According to the issue prospectus, the bank has recorded a loss of Rs 62 crore in year ended March 1999 and has accumulated losses of over Rs 155 crore in the last two years - thanks to mounting non-performing assets (NPAs). ``However, in the last two quarters, the bank has posted a net profit of Rs 4crore and expects to make a profit of Rs 10 crore in the fiscal 2000,'' bank chairman P K Tayal said here today in a news conference.

The issue, which closes on November 22, has already crossed the Rs 31-crore mark and the Tayals will pick up the unsubscribed portion, he said. According to the prospectus, the bank's capital to risk assets ratio (CRAR) stood at 1.67 per cent as compared to 8 per cent recommended by the RBI. Tayal said the bank had launched the rights issue to enhance and strengthen the equity base of the bank and to maintain the capital adequacy ratio within the prudential norms.

According to the prospectus, the SEBI is also looking at the alleged violation of SEBI takeover guidelines by the present chairman P K Tayal. Sebi received these complaints from the Central Economic and Intelligence Bureau and other investors. The bank says this will not affect bank's working as Sebi's action will be against individual directors.

BoR is offering 4,48,55,480 equity shares of Rs 10 on a rightsbasis in the ratio of five equity shares for every two equity shares held at a premium of Rs 5 per share. Further, each right carries a detachable warrant having the right to subscribe to one equity share within 12-18 months for each new share. The issue has already opened for subscription on October 22 and at present the scrip is ruling at around Rs 21 on the BSE. The bank's equity capital which currently stood at Rs 17.93 crore would reach Rs 62 crore after the completion of this issue. The Tayals at present own 4.5 per cent stake which will go up to 14.5 per cent after the issue.

Though the bank had a track record of making profits for several years, the bank slipped into red due to huge non performing assets (NPAs) and recorded a net loss of Rs 53.92 crore and Rs 57 crore for fiscal 1997 and 1998 respectively. Tayal said that the bank had recovered nearly Rs 28 crore (NPAs) in the current financial year and targeted a recovery of Rs 100 crore by the end of financial year 2000.

The NPAs valued at Rs359 crore is likely to come down in the coming years, he said. ``Our first preference would be to maintain the capital adequacy and then go for any expansion,'' Tayal said.

One of the bank's subsidiaries, Rajasthan Bank Financial Services Ltd (RBFSL), is a loss-making venture and is currently facing a winding up petition from two of its creditors and one criminal complaint filed by one of its creditors. The RBI has also refused permission to BoR to provide any further funds of Rs 3.64 crore for meeting its dues. Besides, the issue prospectus says that RBFSL has violated SLR norms and RBI directives.

The management says that since the funds placed by the company became sticky due to the non-payment by its borrowers, RBFSL was unable to meet its commitments regarding repayment of the borrowings raised through ICDs/loans and this situations has led to the winding up petition. The bank has made a further representation to the RBI to provide funds to its subsidiary.