As per the deal between Sivasankaran and Nadar Mahajana Bank Share Investor's Forum to be signed in Chennai on Sunday, the forum would pay Rs 186 crore for 67.3 per cent equity, sources engaged in striking the deal said here. As a gesture of goodwill, Sivasankaran-owned Sterling group would donate Rs 31 crore to the the corpus fund being raised by the community to buy the equity.

The private sector TMB hit headlines three years ago when Sivasankaran bought the stake from Essar group which in turn had garnered the equity from a few individuals. Ever since Sivasankaran bought the stakes, the matter had become a politically sensitive issue in Tamil Nadu with Nadar community trying to regain control of the bank.

Sources said fourrepresentatives of the Nadar community would join the board of directors of the bank within a week and all transactions would be completed before December 31. As a token of gratitude to Sivasankaran for coming down from his earlier demand of Rs 256 crore for the transfer of equity, Nadar community has agreed to use the cell phone services of Sivasankaran-promoted Srinivas Cellcom and internet services of Dishnet Ltd.

As per the agreement, the Nadar Forum would enter into insurance business over a period using the surplus being generated by the bank in order to create employment opportunities for the community.

Nadar Forum has thanked the Prime Minister Atal Bihari Vajpayee and the state chief minister M Karunanidhi for helping the community in regaining control of the bank. President of the forum Ramachandra Adityan met Karunanidhi yesterday and thanked him for his support to the community over the issue.

Forum sources said Nadar group would find it easy to raise the fund since all political parties,central and state government support them in their venture. Even AIADMK leader J Jayalalitha who took up the issue with the prime minister at one stage has supported the deal. When contacted financial director of the sterling group, A Subramaniam said ``Now that deal is struck, all are happy and we will all work towards good future of the bank.''

He pointed out that TMB has been one of the best profit making banks in the country and one of the few profit making companies in Tamil Nadu. TMB had reported a profit of Rs 38.15 crore in 1997-98 and over Rs 50 crore last year. The bank has over Rs 2000 crore deposits with only a paid-up capital of Rs 28.45 lakh shares of Rs 10 each.

Forum sources said many financial institutions have evinced keen interest in taking stake in the bank. The forum is likely to offload equity after the transactions with Sivasankaran is over. The controversy reached its pinnacle in February last after the Reserve Bank of India (RBI) refused to acknowledge transfer of shares inSivasankaran's favour stating that it could be done only after board of directors of the bank made a reference to this effect to the apex bank.

Nadar community which holds a minority stake of 25 per cent in the bank had been refusing to make such a reference to RBI fearing loss of management control.

Sivasankanran had offered to sell his equity to the forum for Rs 256.73 crore on the basis of earnings per share of the company in 1997-98. He had said in early March that he was prepared to sell the equity valued at ten times of the EPS as mentioned in a Nadar community booklet.

Earlier efforts of the community to acquire the stakes did not materialise as the price offered was "too low." Sivasankaran had said that if the ``fair price formula'' based on ten-times EPS was not acceptable to the forum, he would insist on appointing one independent evaluator each from both the sides to value the assets of the bank for any deal.

Nadar community had formed a panel in March last to mobilise funds to acquire thestake held by Sivasankaran in its effort to regain management control.