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Christian Syrian Bank issue: board, church clash over share transfer

D Jose in Thiruvananthapuram

The five-year-old attempt by the Bangkok-based Non-Resident Indian business group headed by Surachan Chansrichawla to take over the Catholic Syrian Bank has taken an interesting turn with fissures developing between the Church and the CSB management over the transfer of shares to Bombay-based Apple group of companies.

The Church has come out against the present board of directors of CSB after the latter approved the proposal by the Chawlas to sell part of the shares they had acquired in 1995 as part of its attempt to take over the Thrissur-based bank.

The board approved transfer of about 28 per cent of the 38 per cent shares the NRI Group has acquired to the non-banking financial institution at its meeting on January 31 with a view to achieve the capital adequacy norm prescribed by the Reserve Bank of India. The CSB would require Rs 150 million to meet the capital adequacy.

The deal would help the bank to issue a rights issue to the shares being transferred to the Apple Group. The CSB, which had floated a rights issue in 1999, could not issue the rights against the shares held by the Chawlas in the absence of permission of the RBI to transfer the shares in the names of the NRIs.

The Chawlas have thought of the tie-up with the Apple Group, as the RBI will have no objection in transferring the shares to an Indian company.

The Thrissur Metropolitan Archbishop, Mar Jacob Thoomkuzhi, who had opposed the deal, has accused the CSB board of directors of bending to the NRIs with ulterior motives. The Archbishop feels that the members of the CSB board had vested interests in approving the deal, which is not in the interest of the people of Thrissur, who have considerable stake in the bank.

He said that he was surprised by the stand taken by the board, as even the RBI had taken a favourable stand towards the church demand. “The attempt by the CSB board to offer the bank on a platter to outsiders will not be acceptable to the people of Thrissur, who built up the bank with certain social objectives. An outsider will not be able to safeguard these objectives, which are held sacred by the Church,” he added.

The worsening of relations between the Church and the management does not augur well for the bank, since the bulk of deposits in the bank are held by Church and its various organisations. They had threatened to pull out the deposits at the heat of the campaign launched by Kundukulam in the early stages.

The committee appointed by Jacob Thoomkuzhy to deal with the attempt by the NRIs to transfer their shares to the Apple Group had even come up with a proposal to help the bank to solve the capital inadequacy problem. The committee headed by Thrissur Metropolitan Cathedral vicar Father Lawrence Olekkengal had suggested that Church and its various organisations could invest in the shares to mop up the sum required to meet the capital adequacy norm prescribed by the RBI.

The proposal was also acceptable to the Archbishop, who felt that the RBI could be requested to extend the date for fulfillment of the capital adequacy stipulation till such time the Church mobilises the funds to buy the shares.

The Archbishop has already written to the RBI stating that it would raise the money required to meet the capital adequacy from men of goodwill and the local community, who have considerable stake in the bank.

He felt that this would be a better proposition than bringing an upcountry business group into the picture.

The move by the Chawlas for a tie-up with the Apple is believed to be the last ditch effort by the NRIs to wriggle out of the tangle, in which they were caught unwittingly five years ago. Their attempt to acquire the majority shares of the bank was bitterly opposed by the then Archbishop late Joseph Kundukulam. The present move by his successor indicates that the Church would not allow the bank’s management to change hands.

Kundukulam’s successor had written a letter to the RBI governor last month not to permit the transfer of the shares to the NBFC, saying that it would defeat the purpose for which the bank was set up by the leaders of the Christian community in 1920.

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Kerala