After one-and-a-half decade of rivalry and public sparring, the
Catholic church in Kerala has said it is giving up efforts to wrest the
control of the Catholic Syrian Bank which has many of its community
members as shareholders.
It however vowed to resist any move to shift the headquarters out of Thrissur or renaming the lender.
"Neither the Archdiocese of Thrissur, nor the CSB Protection Committee nor the Catholic community have any enmity towards the bank now. The bank is running well under the stewardship of VP Iswardas (Managing Director and Chief executive) today," Archdiocese of Thrissur auxiliary bishop Mar Raphael Thattill told PTI.
On this change of stance, the Bishop said, "the Archdiocese is not in a position to put up a string fight to control the bank. The shares held by the Catholic community and the church together are under 10 per cent only now."
The church is happy to cooperate with the bank management for its progress, the bishop said further.
However, he quickly added, "if the bank attempts to deviate from the objectives of its original promoters like shifting the headquarters out of Thrissur or change its name, we will resist such moves."
The CSB Protection Committee convener Johny Chandy also concurred saying, "we are not pursuing our effort to take over CSB, as we have been unable to buy shares from Chawla.
"However, we will ensure that the bank maintains the spirit of its initial promoters and uphold the interest of the Catholic community."
Chandy's family, one of the promoters of the bank, told PTI over phone from Thrissur, the bank was initially set up by around 30 Syrian Catholic families of Thrissur way back in November 1920.
However, when reached, CSB non-executive chairman S Santhanakrishan refused to comment saying: "I am not aware of such development, as the church has not spoken to us on anything in this regard."
Similarly, one of the directors S Antharaman too, said, he cannot comment, "as all directors have been asked not to talk to the media."
Managing director and Chief Executive Iswardas, when contacted said in Thrissur: "the bank has no plan to move out of the city or rename the bank. The bank's avowed policy is to run the 90-year-old organisation in adherence to the objective of its promoters."
As to how they will be able to ensure that the management, and especially the largest shareholder Chawla who is antagonistic to the idea of the Church members taking over the bank, would adhere to this.
Chandy said, "we'll closely monitor the functioning of the bank... We'll go to any extent to protect our interest, including approaching the courts or the government, as we did in the past."
Chandy further said Chawla had also out-of-turn converted the rights that were issued to him in 1998 against which the CSB Protection committee is fighting at the Company Law Board.
These shares were issued to him at Rs 34 a piece initially and then at Rs 120 a piece in 1998.
However, it is learnt from bank sources that both these rights issues (in 1998 and 2008) were first offered to the Church and the Catholics. But neither the church nor the community and not even the CSB Protection Committer showed any interest in subscribing to them.
Chawla's takeover bid run into rough weather on strong opposition from the church, led by the then bishop Mar Joseph Kundukulam, who, publicly threatened to withdraw the deposits running into hundreds of crores held by Christians, if the bank management did not desist from transferring their shares to Chawla.
He then set up the CSB Protection Committee.
By this time, the Chawlas had acquired 34 per cent of the bank or 21,42,736 shares at an average price of Rs 85 a share running into Rs 18.22 crore.
In the meantime, Chawla's transactions were noticed by the Enforcement Directorate, and a probe was launched.
Following this Reserve Bank of India barred him from transferring his shares to anyone, including his holding entity Siam Vidhya Group (SVG), through which he along with 10 of his family members bought the CSB shares.
Later, RBI allowed him to do so, on condition that SVG will not hold more than 10 per cent in CSB-- a level the central bank is comfortable with for promoters of private banks--while for a non-promoter, RBI caps it at 5 per cent.
Also that any share sale of over 1 per cent should be done with its (RBI) prior approval. The RBI had originally set a deadline of March 31, 2010 for the NRI to bring down his stake to 10 per cent.
The RBI also barred SVG from the board of the bank. "The SGV will not have any representation on the board of CSB," the apex bank had ordered.
But Chawla failed to sell his shares to a clutch of investors in March as many of the prospective buyers failed to meet the eligibility criteria of the central bank. Following this, he sought permission to extend the deadline by two more years.
Following this, the largest private sector bank in Kerala, Federal Bank, which has a 5 per cent interest in CSB, tried to buy out the bank, but on valuation issues the Kochi -based lender called of the bid last February.
After this, in mid-September this year, Mumbai-based Edelweiss Capital raised its stake in CSB to 4.9 per cent from the earlier 1 per cent, by buying 4 per cent from Chawla.
Apart from them, the engineering major L&T has around 2 per cent and a group of local investors hold around 15 per cent.
The private lender CSB had a deposit portfolio of Rs 6,332 crore as of last fiscal end and a loan book of Rs 3,683 crore.\
It had posted a net profit of Rs 37.18 crore on a total income of Rs 656.19 crore last fiscal, according to the information available on its website.
SIC: BS/INT'L