CSB Goes For Bond Issue To Shore Up Capital Base

Kochi, May 26: | Updated: May 27 2003, 05:30am hrs
With the over eight-year long share transfer issue yet to be resolved, the Thrissur-based Catholic Syrian Bank (CSB) is taking the bond route again to shore up its capital base. Bank chairman NR Achan told FE that the board has decided to go in for a Tier-II bond issue for Rs 30 crore next month.

With this, CSBs capital adequacy ratio (CAR), which stood at 10.53 per cent at the end of last fiscal, is expected to cross 11.5 per cent.

Mr Achan refused to comment on the delay in settling the share transfer issue which is now before the court and only hoped the matter would be resolved soon. Any relief from the court would help CSB go ahead with its future plans in a big way, he said, adding that the bank was in no way party to the case.

The controversy landed in the court nearly three years ago when the RBI refused to transfer nearly 37 per cent shares acquired by Bangkok-based Siam Vidya Group led by Mr Surichan Chansri Chawla in the mid-nineties. The Vidya group which had then earned the wrath of even the Catholic church, moved the Madras high court seeking lifting the freeze on the shares transfer and making both the RBI and the Enforcement Directorate (ED) defendants.

Sources close to Vidya group said that its move to have a stake in CSB had received the nod way back in 1997 of the Foreign Investment Promotion Board (FIPB) and the Cabinet Committee on Foreign Investment. However, the ED had objected to the transaction and declared the transaction unauthorised under FERA which has now given way to FEMA. In December 1998, CSB came out with a rights issue worth Rs 26 crore where shareholders were given two shares for every three held. However, the Vidya group could not subscribe to the issue as the shares it had acquired had not been transferred to it. These shares were freezed and kept in abeyance. It was then that the Vidya group sought legal recourse and moved the Madras high court where the matter has been pending.

CSB officials feel that the controversy had affected the banks attempt to widen its capital base. CSB clocked a net profit of Rs 45.16 crore in the last fiscal and the target had been fixed at Rs 100 crore in the next three years, Mr Achan said. The present net worth is Rs 120 crore which is expected to double in the next three years, he said, adding that it was as low as Rs 56 crore three years ago.