Kochi: Kerala-basedCatholic Syrian Bank Ltd (CSB) is looking to float a housing finance arm and a non-banking financial company, or NBFC, to improve its asset base, a top executive said.
The bank’s board gave its approval last week for approaching the Reserve Bank of India (RBI) seeking licences for these two subsidiaries, said V.P. Iswardas, managing director and chief executive officer of CSB. CSB will also seek the central bank’s approval to raise its capital to Rs 1,000 crore in the next fiscal year.
“Presently, the capital base is around Rs 500 crore. There are three options before the bank—an initial public offering (IPO), a QIP (qualified institutional placement) or a rights issue. The bank already has a capital adequacy ratio of 11.5%,” said Iswardas.
A director on CSB’s board said a public share sale would be the best option among these, given RBI’s stipulation that the single largest shareholder in the bank, Sura Chansrichawla, a non-resident Indian based in Bangkok, has to dilute his stake from 17% to 10%.
“Moreover, all the other Kerala-based banks—Federal Bank , South Indian Bank and Dhanalaxmi Bank—have public holding and CSB will have to take that route,” the director said on condition of anonymity. A housing finance subsidiary would give the bank greater flexibility in tying up deals with realty companies, said Ishwardas. CSB’s home loan portfolio is about Rs 300 crore, accounting for just 6% of its total advances. As for the non-banking financial business, Ishwardas said CSB earlier considered acquiring an NBFC but finally decided to float one and then scout for possible mergers.
For over a year, CSB was a potential acquisition target until Federal Bank failed to meet the asking price. “We are now focusing on improving our business. The bank... has entered its 90th year and growth over the last one year has been more than one-third that it had over the last 89 years,” said Iswardas.
CSB’s total business as on 31 December was around Rs 13,600 crore, up from about Rs 10,000 crore at the end of 2009, he said. Besides Chansrichawla, three Mauritius-based private equity funds—AIF Capital, Gartmore Private Equity and Siguler Guff—collectively hold about 15% in CSB. Federal Bank and Mumbai-based brokerage Edelweiss Capital Ltd hold 5% each and Larsen and Toubro Ltd, 2%. Local investors as a group hold another 15%.