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Church fumes over NRI-NBFC deal for Catholic Syrian Bank shares

D Jose in Thiruvananthapuram

The church in Kerala is upset over L'affaire Catholic Syrian Bank.

A Bangkok-based non-resident Indian business group, headed by Surachan Chansri Chawla, is planning a tie-up with a Bombay-based non-banking financial company to lodge shares of the Thrissur-based bank. Five years ago, Chawla had acquired the CSB shares as part of a bid to take over the bank.

News about the proposed NRI-NBFC tie-up has irked the church.

Thrissur Archbishop Mar Jacob Thoomkuzy has urged the Reserve Bank of India not to permit the transfer of the shares to the Bombay firm Apple. In a letter to the RBI governor, the Archbishop has pointed out that the transfer of the shares would defeat the purpose for which the bank was set up by the leaders of the Christian community in 1920 and affect the structure of the bank. “The bank was aimed at serving the members of the community and the people of Thrissur as a whole,” he added.

The Archbishop has expressed the fear that the transfer of the shares to the non-banking financial institution would lead to its domination in the decision-making of the bank. “Driven by a profit-motivated partner, the bank may not be able to fulfil its social objectives,” he added.

The Archbishop has set up a committee under the Thrissur Metropolitan Cathedral vicar Fr. Lawrence Olekkengal to deal with the situation. The priest has started consultations with leaders of the community to find an amicable solution to the vexed problem, according to sources in the Archdiocese.

The committee is reportedly not averse to the proposal of the NRI group to sell part of the shares to resolve the present uncertainty over the functioning of the bank. The source said that the committee would not oppose the sale if it did not affect the present equations in the management. The committee would not like the new partner to have more than 50 per cent of the equity.

Fr. Lawrence has reportedly expressed his willingness to consider the proposal if there is a consensus among the three parties, the Archdiocese, the NRIs and the NBFC. According to him, the Archdiocese would not oppose any arrangement if that safeguards the interest of the people of Thrissur.

The committee is also exploring the possibility of any of the church organisations purchasing the share from the NRIs. A company the shareholders had floated when the NRIs had acquired the shares in a bid to prevent the takeover, had expressed its willingness to purchase the shares. However, the company has been inactive for the past few years.

It is not certain whether the NRIs would agree to sell the shares to an agency of the Church’s preference since it is not totally prepared to give up its claim on the bank. The NRI group, according to highly placed sources, had identified the Bombay-based NBFC for selling the shares as per the understanding to sell them back to the former whenever they demand. Such an understanding may not be possible with an outside organisation.

The Chawlas had thought of the present arrangement to ensure that the shares held by them become eligible for the rights issue floated by the CSB earlier. The rights issue against the 38 per cent shares acquired by the NRIs could not be issued, as the RBI had not given the consent for their transfer in their favour.

The bank also could not meet the capital adequacy norm fixed by the RBI in the absence of rights issue in favour of the shares held by the NRI group. The Chawla group has proposed to lodge 21.18 per cent of the shares to enable the bank to meet the capital adequacy ratio.

The proposal is expected to come up before the bank’s board of directors meeting at Thrissur on January 28. A smooth approval to the proposal is not expected at the meeting in the light of the protest by the Church.

The present move 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.

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Kerala