INDIAN financial institutions have torpedoed moves by multinational interests to increase stakes in their Indian operations to controlling levels.
The institutions decided to oppose any preferential share allotment proposals which took the stakes of corporate promoters involved beyond the 26 per cent mark.
This is despite the fact that all preferential offers have to be made only at market-related prices, and not at the heavy discounts that prevailed during most of 1994.
The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) had put a stop to that practice by issuing strict guidelines last November.
In cases in which promoters' stakes exceeded 26 per cent, the institutions decided to permit preferential allotments to the extent of keeping that stake constant, if the company concerned issued fresh capital.
The move assumed significance in view of the fact that several promoters had been contemplating preferential offers to themselves at current market prices, which are relatively low, and expected to rise in the next few months.
