CSB share transfer row hots up again

By Our Staff Reporter

THRISSUR, JAN. 26. The controversy over the move by the Bangkok- based NRI group headed by Mr. Surachan Chansri Chawla to acquire 36 per cent of the shares of the Catholic Syrian Bank (CSB), Thrissur, has been revived again with an anti- takeover group blaming the directors for the bank's inability to achieve the capital adequacy norm.

The management, however, denied the allegation and said the bank would be able to achieve the norm by March 31 as directed by the Reserve Bank.

In a statement the Chairman of the CSB Protection Committee, which is spearheading the campaign against the takeover by Monsignor Joseph Kakkassery, said the existing board of directors had been prolonging a resolution of the share-transfer dispute for the last six years.

The NRI group purchased 36.18 per cent of the shares in early 1994 through the then directors, who mobilised such a large quantum from the local level shareholders. However, the group has not yet obtained the sanction from the RBI to effect the transfer in its favour.

These shares were remaining in cold storage with either the original holders or the new buyers (the NRI group) not being able to exercise full right over them. However, the group was managing to get is nominees inducted into the board of directors and thus virtually getting control over it.

But the delay in the resolution of the issue had an indirect effect on the functioning of the bank which was finding it difficult to achieve the capital adequacy norm. The RBI made it clear that the bank would be permitted to expand its lending operations only if it raised its capital adequacy ratio to nine per cent from the present six per cent. This would mean the bank adding Rs. 40 crores to 50 crores to its capital, and as per the latest RBI direction, this should happen before March 31.

Meanwhile, a section of the Syrian Christians launched a campaign against the attempts to sellout the bank to ``outsiders'' as the bank was floated by the Thrissur people, by is community. Ironically the directors who had sold the shares of the bank to the group were also members of that community.

But those opposed to the group's takeover bid said they were prepared to invest the necessary amount to enable the bank to achieve the capital adequacy norm and were willing to buy back the shares from the Chawla group. The campaign against the takeover was pursued by the former Archbishop of Thrissur, Mar Joseph Kundukulam. After his death a committee under Mons. Kakkassery, who is also the Vicar-General of the Archdiocese, was set up to pursue the campaign.

In another development, the group, in a bid to bail out the bank, came out with a proposal in 1999 to hand over its shares to another Indian group at least temporarily. The proposal was then to sell the shares to the private finance group, Apple Financiers. However, the proposal was shot down by the SEBI as it had some reservations about the financial health of the Apple group.

Now the board of directors has submitted a new proposal indicating the willingness of three other groups to buy back the shares from the NRI group. The names of these groups have been submitted to the RBI and even the Chairman of the Bank, Mr. R. P. Joshua, said he was unaware of the names.

But the CSB protection committee has questioned the efficacy of the latest move of the directors. According to Mons. Kakkassery, the sale and purchase of shares by the shareholders and the NRI Group in 1994 was in violation of the FERA norms and the Enforcement Directorate has already issued notices to both the parties involved in the deal.

He claimed that the ED officials had taken into custody the share certificates and the applications given to effect the transfer of shares in favour of the NRI group. According to him, the ED already issued notice to the bank last September to impound those shares. ``How can these impounded shares of the Chawla group can be resold to any member of three of the new proposed group?,'' Mons. Kakkassery asked. The Board of Director of the bank was trying to sabotage the proposal of the CSB protection committee to add the required capital to the bank. The committee had met RBI officials in Thiruvananthapuram on August 21 last, and as agreed the committee submitted a detailed plan for adding Rs. 60 crores to the capital of the bank ``in stages.''

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