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Dinesh Narayanan

While the Reserve Bank of India has reportedly cleared the proposal, it needs FIPB approval as it involves change of ownership of equity.

MUMBAI, Jan. 16

THE Securities and Exchange Board of India (SEBI) is understood to have written to the Foreign Investment Promotion Board (FIPB) to put on hold the proposal by the promoter group of Zee Telefilms Ltd (ZTL) to pledge five crore ZTL shares with Credit Suisse First Boston (CSFB) to raise $40 million, pending investigation into alleged irregularities in certain transactions of the company and its promoters.

The Zee group has approached FIPB for permission to pledge five crore equity shares of Re 1 each owned by Delgrada Ltd, a Mauritius-based overseas corporate body (OCB) owned by Essel group of Mr Chandra, with CSFB, Singapore. As per the terms of the pledge, the ownership of the shares would pass to CSFB on non-repayment of the borrowing at the end of three years.

While the Reserve Bank of India has reportedly cleared the proposal, it needs FIPB approval as it involves change of ownership of equity. According to sources, the capital markets regulator has told FIPB that the proposal should not be approved in the interest of the investing public.

SEBI is investigating alleged rigging of ZTL shares during the stock market scam, commonly known as the Ketan Parekh scam. The capital markets watchdog is understood to be looking into several issues, including the alleged use of inter-corporate deposits to fund certain friendly brokers who, in turn, helped `control' the market price of ZTL.

Even though the JPC report had given a clean chit to the group, SEBI has not yet completed its investigations. SEBI had, in an interim report to the Joint Parliamentary Committee that probed the Ketan Parekh scam of 2001, said that prima facie ZTL and its promoters seemed to have violated regulations.

Certain inter-corporate transactions between listed and unlisted entities of the Zee group were seen to be in violation of regulations, and appeared to have been done at the expense of the listed company's shareholders. Some of the group's privately-held companies (there are reportedly more than 50 such companies), some of which, including Delgrada, were capitalised at as little as Re 1, allegedly helped fund the stockbroker, Mr Ketan Parekh's market operations.

The final report of the JPC quoted SEBI as saying that the investigations "conducted so far in regard to the scrip of ZTL have not reached any conclusive finding regarding promoter-broker nexus". It, however, said the probe was continuing.

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