Catholic Syrian Bank plans Rs 80 crore rights issue

The Thrissur-based Catholic Syrian Bank (CSB) is planning to float a rights issue of around Rs 80 crore early next year.

The rights issue will enable the bank boost its capital to around Rs 200 crore and its capital adequacy ratio will rise to around 13 per cent.

The Reserve Bank of India (RBI) in its draft guideline on ownership and governance in the Indian private sector released in July had recommended an increase in the entry capital requirement for new private sector from Rs 200 crore to Rs 300 crore within three years.

Where the net worth declines to level below Rs 300 crore, it should be restored within reasonable time, said the RBI. N R Achan, chairman and chief executive officer, Catholic Syrian Bank, said the bank is exploring various options of fund raising like an initial public offer (IPO) or rights issue.

However, the bank would prefer a rights issue, he added. This will enable the bank boost its capital base and support growth, said Achan. The guidelines released in July also states that no single entity Indian or foreign should hold more than 10 per cent in a bank.

In line with the draft guideline the bank is also exploring the option of stake sale to a leading foreign bank, said banking sources. The Thailand-based Chansarichawla group holds around 20 per cent stake in the bank, said the source.

In addition to the Rs 90 crore rights issue the bank will need more capital to adhere to the Reserve Bank of India recommendation of increase in the entry capital requirement for new private sector from Rs 200 crore to Rs 300 crore within three years, said sources Speaking on the banks expansion plans, Achan said the bank is on a major branch expansion drive in northern India.

":We are contemplating take over of a north based old private sector bank this will enable the bank expand its operations and widen its deposit base, said Achan. The bank has identified 16 new centres for opening of branches during the current year and has decided to expand its branch network to New Delhi and West Bengal."