THRISSUR, February 15: The four-year-old Catholic Syrian Bank Ltd's share transfer row has taken a new turn with the Thailand-based Siam Vidya Group (SVG) asking the bank not to return the shares to the NRI group. Sources in the bank told The Financial Express that the Reserve Bank of India had never directed the CSB to return the shares to the NRI group.Following Chawlas' letter, the bank has put on hold any decision on returning the 36.23 per cent equity shares of the bank to the NRI group which acquired them four years ago.
The bank had also communicated the decision duly to the apex bank and the Company Law Board, bank sources said. The move in no way violates the apex bank's decision not to acknowledge the transfer of shares in favour of Chawlas, they added.
Bank sources added that the director board of the bank which met on Wednesday had accepted a letter written by SVG chief Surichan Chansri Chawla saying the bank "need not return the shares lodged with the bank for transfer to the grouppending any decision from appropriate authorities".
They said the director board had received legal opinion saying the acceptance of the letter in no way violated the spirit of the apex bank directive.
According to sources, the central bank in its letter early December had only "expressed its regret to acknowledge the share transfer", and had not directed the bank "to return the shares" to the NRI group. This means that apex bank had acted only under the Banking Regulation Act and not under the Companies Act, the sources clarified. Under the BRA, any acquisition of bank shares over one per cent by any party needs to be cleared by the RBI, they said.
By this move, the RBI has pre-empted the NRI group taking legal recourse to get its grievances redressed. The sources said that if the Reserve Bank of India had acted under the Companies Act and directed the bank to return the shares, the non-resident Indian group could have dragged the apex bank to court.
This, according to them, is because under theCompanies Act any decision on the share transfer should be taken within six months after the lodging of shares for transfer.
They added that the director board's decision to defer any resolution on the issue therefore stands justified under the Companies Act. "The time clause under the Companies Act is meant for protecting the transferee," sources said, adding, "Since the transferee himself has asked the bank not to return the shares, our decision was word perfect under the Companies Act."
The three-year-old Catholic Syrian Bank Ltd (CSBL) takeover drama started when the Thailand-based Siam Vidya Group in a first-ever takeover bid in the Indian banking history acquired 19.62 lakh shares accounting for 36.23 per cent of the bank in early 1994.
Chawlas, after getting the necessary clearance from the Ministry of Finance and Foreign Investment Promotion Board had lodged the shares with the bank for transferring them to it in 1997. CSB duly forwarded this to the RBI for acknowledgement. However, the ReserveBank wrote to the bank last month expressing regret for acknowledging the request. But, the three subsequent director board meetings of the bank avoided taking any decision on the issue.
The seven elected directors of the bank had met the RBI deputy governor last week and submitted a memorandum seeking reconsideration of the decision not to acknowledge the share transfer. Chawla had also written a letter to the prime minister seeking his intervention in the issue.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
