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Thai group seeks transfer of stake in Christian Syrian Bank to meet RBI norms

D Jose in Thiruvananthapuram

The Bangkok-based Siam Vidya group is on the lookout for a “dependable” Indian to temporarily transfer nearly 40 per cent of the shares of the Catholic Syrian Bank they had acquired in 1993 to take control of the Kerala-based bank.

The NRI group has thought of the temporary arrangement to enable the bank to achieve the capital adequacy ratio stipulated by the Reserve Bank of India.

The bank had to exclude the shares held by the group while issuing the rights issue last year due to uncertainty over the share transfer.

The bank has been able to achieve a capital adequacy of only six per cent despite the rights issue. It needs another Rs 460 million to reach the stipulated eight per cent. The present capital of the CSB is Rs 500 million.

Allotment of rights issue towards the 40 per cent shares held by Siam Vidya group would help the bank to mobilise Rs 110 million. It has planned a preferential issue of Rs 200 million and private placement of shares worth Rs 150 million to mop up the remaining amount required.

The idea to temporarily transfer the 40 per cent shares of the NRI group was mooted by the CSB management to enable it to issue the rights issue.

Surchan Chansi Chawla, who heads the group, has reportedly approved the proposal provided the person to whom the shares are transferred gives them back after the formalities regarding the rights issue are completed.

Sundar Rajan, who represents the Chawla group in the CSB board of directors, said that the NRIs were looking for a highly ''dependable Indian citizen or group'' to keep custody of the shares for a minimum period of three months.

The group is hopeful that the share transfer issue pending for the last five years could be settled within the next three months.

The representatives of the NRI group are in touch with the RBI for transferring the shares in the names of the NRIs. The sources said that the RBI has demanded a reduction in the holdings of the group to reconsider the share transfer issue.

The NRI group is understood to have agreed to consider the option. The Siam Vidya group has already got the approval of the Union Cabinet Committee and the Foreign Investment Promotion Board for their investment in the bank.

The NRI bid to take over the bank was strongly resisted by the Christian church as it felt that the change of control would defeat the objectives of the bank. The resistance to the takeover bid had lessened following the death of Archbishop Joseph Kundukulam, who had given leadership to the campaign against the Chawlas.

The uncertainty over the share transfer issue had affected the operation of the bank. Its plan for expansion of the branch network and automation of branches had suffered. The bank has not been able to issue dividend for the last two years. The deposits, which remained stagnant for the first two to three years, have, however, started looking up. The bank registered a 15 per cent growth in the deposits in the last year.

The non-fulfillment of the capital adequacy norm had caused several problems for the bank. Besides adversely affecting the image of the bank in the banking circles, it deprived the CSB of benefits available to commercial banks that had met the eight per cent capital adequacy norm.

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