The income-tax department searched the premises of five top broking houses on Saturday, including Motilal Oswal Securities and SSKI Securities, in connection with the investigation into the recent surge in bank stocks, an income-tax official said.

Data on transactions in banking stocks were seized from these brokerages, following instructions from Finance Minister Jaswant Singh to check whether government leaders or senior officials had exposures in bank stocks, the official said.

The search operation at Motilal Oswal Securities was significant because it was the first to make a call on bank stocks almost 12 months ago.

"The call made by Motilal Oswal Securities on select bank stocks was based on conviction about the fundamentals of the stocks," Rajiv Phadke, senior vice-president of corporate planning and HR at the brokerage, said.

"Among the brokerages, we were the first to make a call on banking stocks. Our recommendation led to clients taking positions in them."

SSKI executives were not available for comment. "The search was conducted by income-tax officials at three of our offices in the city as per Section 133 (A) of the Income-Tax Act," Phadke added.

There was talk in the market that the Motilal Oswal Securities offices were searched because of the high exposure of the firm and its clients in bank stocks. There is speculation that more brokers will come under scrutiny.

The Securities and Exchange Board of India recently launched an investigation into the sudden upsurge in scrips of state-run banks in June 2003.

The surge in bank stocks was driven by lenders' plans to return capital to the government.

The scrip price of Canara Bank doubled this year on the Bombay Stock Exchange, while that of Punjab National Bank rose 97 per cent in the last four months.