Flashback 2009: Catholic Syrian Bank and the Church

 As news about Fairfax Financial's acquisition of IDBI Bank shares and the evolving fate of CSB Bank loom large, it is a fitting time to look back. Let us recollect the days when the Catholic Church fiercely attempted to hold onto the shares of the Catholic Syrian Bank (CSB) and reflect on where it stands today.

Below, I am sharing the perspectives and warnings I originally expressed through my blog back in December 2009:

📌 Flashback 2009: Catholic Syrian Bank and the Church

In late 2009, Federal Bank secured the green light from the Reserve Bank of India (RBI) to pursue a takeover of the Catholic Syrian Bank (CSB), backed by a due diligence report from KPMG.

In response, the Church quickly mobilized, forming a "CSB Protection Committee." Spearheaded by patron Bishop Andrews Thazhath, the initiative aimed to resist any merger to ensure the bank retained its local Thrissur identity. At the heart of the crisis was Bangkok-based NRI Surachan Chawla, who held an approximate 38% stake and was facing strict RBI directives to dilute his ownership down to 10%.

As Chawla looked to sell his surplus holdings to Federal Bank, Church delegations—led by Vicar General Monsignor Raphael Thattil and key board directors—actively toured Catholic parishes. They solicited local community investors to buy out Chawla’s shares to fend off the Federal Bank takeover.

The Financial Reality Check

While the Church appealed to community pride, a hard look at the unlisted bank's financial metrics in 2009 painted a much more troubling picture.

The targeted sales price of approximately ₹300 per share put the Price-to-Book Value at 1.46x and the Price-to-Earnings multiple at 15.23x, which was significantly higher than more profitable peers like South Indian Bank and Federal Bank. Furthermore, CSB's Return on Capital Employed had dropped to 9.57% representing ₹37.19 crores. Worse still, the half-year ending September 2009 recorded a sharp net loss of ₹20.28 crores, plunging the half-year EPS into negative territory at -₹10.74.

The bank’s dividend history was also highly inconsistent. Given the operational bleeding, projected returns for investors were dismally low. Finally, because CSB was an unlisted entity, any future share sales faced heavy capital gains tax under the proposed Direct Taxes Code, creating a high probability of financial loss for retail buyers.

A Forgotten Proposal

During a meeting presided over by Rev. Fr. Raphael Thattil, I tried to present these financial realities and proposed an institutional alternative. Instead of relying on scattered, unprotected individual retail investments, the Church should have floated private equity funds on a Diocese-by-Diocese basis, structured like transparent trusts or cooperatives.

By limiting each Diocese’s stake to 5%, the Church could collectively bypass RBI holding caps, secure dedicated board seats, and permanently stabilize the bank's ownership structure. Unfortunately, this structured approach was rejected, and warning the community about the exorbitant share pricing made me the unpopular voice in the room.

Investing hard-earned capital cannot be treated purely as an act of blind charity or community pride. While preserving heritage is noble, community business decisions must ultimately be anchored in safety, strict corporate governance, and financial viability.