Of the nine new private sector banks which were issued licences between February 1994 and November 1995, only HDFC Bank and Global Trust Bank have brought down the promoters' stake to less than 40 per cent. Five of them have entered the capital market with equity offerings but the promoters of these banks still hold over 40 per cent.

TimesBank is entering the capital market on Wednesday to dilute the promoters' stake to 66.81 per cent while Centurion Bank is yet to firm up its plans on the initial public offering (IPO). It may enter the market later this year with a Rs 33.75-crore equity issue, a senior Centurion Bank official said.

Goingby the licensing norms, these banks are required to tap the capital market and dilute the promoters' stake to below 40 per cent after the first year of operations. However, RBI allowed banks to defer their public issues on a case-by-case basis considering the poor capital market conditions.

"Enough time has been given to these banks. The same old excuse (of dull market conditions) should not be used to defer issues. It is high time the promoters of these banks brought down their stakes (to below 40 per cent)," a source close to the central bank said.

The boards of the new private banks have started discussing the issue and some of the bank managements are planning to approach the RBI this week. "It will be difficult for so many banks to enter the market, particularly now when the bank scrips are doing badly on bourses," the managing director of one bank said.

A senior official of another bank said the options of private placement and direct selling through the market, instead of a public issue, will beexplored if the RBI insists on the dilution in promoters' stake immediately.

However, RBI may not be too inclined to allow them to take the private placement route as that might jeopardise the objective of broadbasing the shareholding pattern of these banks. A few years back RBI rejected the proposals of IDBI Bank, ICICI Bank and UTI Bank to privately place their shares.

Among the nine new generation private banks, the promoters' stake in HDFC Bank is the lowest at 30.77 per cent followed by Global Trust Bank at 38.43 per cent. Two private equity funds of Chase Manhattan Bank together hold 14.99 per cent in HDFC Bank while IFC Washington, ADB Manila, Hambrect & Quist (USA) and TA Enterprises of Malayasia collectively hold close to 33 per cent in Global Trust Bank.

Among others, the promoters' stake is as follows: 74.25 per cent in ICICI Bank, 71.43 per cent in IDBI Bank, 73.06 per cent in UTI Bank and 64 per cent in IndusInd Bank. Following the merger of 20th Century Finance with Centurion Bank,promoters' holding in the bank has come down marginally, though the exact quantum could not be ascertained.