Mumbai, Jan 28: The Reserve Bank of India (RBI) has quashed the Bangkok-based Sura Chansrichawla-led Siam Vaidya group's attempt to take over the Thrissur-based Catholic Syrian Bank (CSB). It has for the second time rejected a proposal from the bank's board of directors to transfer a controlling stake of 36.23 per cent to the group.The decision is likely to put to rest the ongoing tussle between the Siam Vaidya group and the Syrian Catholic community of Kerala to gain control over the bank. The move is expected to spark off a legal battle, since Chawla had earlier said that he would seek legal redress if the shares are not transferred to his group. Sources at Catholic Syrian Bank said that the central bank rejected the proposal on Tuesday. "The Reserve Bank of India has rejected the proposal put forward by the board of directors and has not given any reasons," said the source. The central bank has also rejected the group's request for Fera clearance to bring in the much needed funds.
Chansrichawla hadearlier said that his group was willing to bring in the funds to hike the capital adequacy ratio of the bank which has for the past few years been much below the stipulated level of 8 per cent. The group was willing to raise its capital to Rs 100 crore.
The Reserve Bank had earlier asked the directors to convene a board meeting to decide on the return of shares to Chawla without effecting the transfer. The board met on January 16 and appealed to the central bank to consider the transfer of shares instead of returning them to the Siam Vaidya group.
Sources said that Chawla had invested close to Rs 30 crore over three years in the bank. It is most likely that he will go to court for the recovery of this money.
Sources close to Chawla said that the Bangkok-based group had held serious consultations with senior officials in the finance ministry to evolve a compromise formula to resolve the impasse amicably.The group, which has interests in the banking, insurance, real estate and hospitality industries insome of the south-east Asian countries, has said that it has no plans to sell its stake in the Thrissur-based bank. A Siam Vaidya representative said that the group's investment in Catholic Syrian Bank should be seen as a friendly investment and that it should in no way affect the functioning of the 75-year-old bank.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
