The Securities and Exchange Board of India has sought details from public sector banks on their aborted plan to return capital to the government last year.

Sebi's surveillance department, which has sought the details, wanted to know if the banks had submitted a proposal to the finance ministry, said the head of a public sector bank, which received a questionnaire from the markets regulator.

The regulator's inquiry is aimed at ascertaining if the banks had actually intended to return capital to the government, and if so, whether there were any announcements by them.

Finance Minister Jaswant Singh had ordered a Sebi enquiry in June 2003. Sebi has analysed data obtained from the stock exchanges on the price movements of bank stocks.

Sebi officials said the regulator will now verify the facts and ascertain whether there was any actual intention by the banks to return the capital and also whether they had any instructions from the government to do so.

"If there was any intention (in the form of a board proposal) then the listed banks should have announced it to the stock exchanges, since it is market sensitive information," an official said. Sebi was trying to tie up the news appearing in the media with the stock price movements.

Last year, several banks including Punjab National Bank, Oriental Bank of Commerce, Bank of Baroda and Andhra Bank had announced their plans to return a part of their capital which was given to them to meet their recapitalisation needs.

Share prices of banks, which intended to return a part of their equity, had increased sharply following the announcements. But subsequent statements from the finance ministry on the pricing formula, which would be adopted led to severe fluctuations in share prices.

The ministry refused to agree to the proposal, on the grounds that the banks will need additional capital to meet higher provisioning requirements in the next few years.