Sources in the bank said it will hit the market with the Rs 67-crore rights issue later this month. SBI Capital Markets has got the mandate to manage the issue which has been priced at a premium of Rs 5 on a par value of Rs 10 per share. "We are planning to hit the market this month itself," the source said.

According to sources, each shareholder will receive 2.5 shares along with a free warrant which will be converted into a equity share after 12 to 18 months. This essentially means that for every 100 shares that a shareholder holds he will receive 250 shares. The free warrant can be converted at either Rs 10 or at a 25 per cent discount to the six-month average of the BoR share price -- whichever is suitable to the investor. The floor price will, however, remain Rs 10.

Sources said that along the Rs 67 crore that will be raised intitially through the rights issue, the issue of free warrants will raise another Rs 67 crore taking the entire capital raising exercise to Rs 134 crore. The issue has been underwritten by Pravin Kumar Tayal, interim chairman of BoR and head of the Sree Krishna Textiles group.

Post rights issue, Tayal's shareholding will stand at 8-8.5 per cent while the Bangurs shareholding-- even after the subscription to the rights issue--will stand at 4 per cent. Sources said that although the Bangurs will try their best to subscribe to their share of rights, it is unlikely that their shareholding will cross the 4 per cent mark.

"The Reserve Bank is unlikely to allow them to come into the bank again. They have been thrown out for five years by the RBI. They may try to make another entry through the backdoor by taking the rights issue route. But the central bank will not allow this to happen," a source said.