The Reserve Bank of India has finally cleared the long-pending transfer of Thailand-based Surachan Chawla's 38 per cent stake in Catholic Syrian Bank.
However, the central bank has made it clear that Chawla can hold 10 per cent of the bank's equity, at the most, and will have to compulsorily sell the remaining 28 per cent to comply with the norms on single-entity shareholding in a bank.
The RBI's views on the transfer of Chawla's shares have been forwarded by it to the Supreme Court, which had recently asked the central bank to take a fresh look at the bank's shareholding.
The apex court will now have to give its verdict on the transfer of the shares in Chawla's name and the sale of the shares to prospective buyers. The date of the next hearing has not been fixed.
Banking industry sources said the move takes the bank a step closer to accessing more funds and pursuing growth plans to meet the more stringent capital adequacy norms under Basel II, due to come into effect in the new financial year.
Chawla had appealed to the Supreme Court after neither the Foreign Investment Promotion Board nor the RBI approved the transfer of shares he bought from CSB directors in 1994.
The stake is believed to have been bought at Rs 85 per share.
RBI's latest views, which were taken two weeks ago, contrast with its earlier refusal to acknowledge the NRI group's shareholding citing doubts over the source of funds.
However, an investigation by the directorate of revenue intelligence gave Chawla a clean chit on his source of funds.
CSB came into being more than eight decades ago, on November 26, 1920, at Thrissur in Kerala. The bank started business on January 1, 1921, with an authorised capital of Rs 5 lakh and a paid up capital of Rs 45,270.
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