The management did not disclose any branch opening plans. However, a person aware of internal discussions said the Thoothukudi-based bank would consider 100-150 new branches in 18-24 months after the RBI’s approval.
Currently, over 72% of the bank’s 509 branches are in Tamil Nadu, and to diversify its presence after the IPO, 75% of these new branches will be opened in other states, the person said on condition of anonymity. Told.
The sanctions on TMB have their roots in January 2016, when its shareholders decided to increase their authorized share capital. 500 crores. RBI noted in June 2019 that the bank did not increase its subscribed capital to at least half of the authorized capital as required, prompting it to impose restrictions, including opening new branches. While some restrictions were lifted in March 2021, one branch remains on expansion.
The person cited earlier said that TMB is also interested in opening digital banking units (DBUs), and that its branch opening strategy will take this into account. Finance Minister Nirmala Sitharaman in her budget speech in February had announced that 75 DBUs would be set up in 75 districts to ensure the benefits of digital banking to every nook and corner of the country.
A DBU is a specialized fixed-point business unit with a certain minimum digital infrastructure to deliver digital banking products and services. These are aimed at expanding digital financial services and promoting financial inclusion, and can be opened in Tier-1 to Tier-6 centers without prior approval of the RBI.
Tamil Nadu Mercantile Bank chief executive KV Rama Murthy said, “It is at the behest of RBI that we are coming up with a public issue. By not opening (allowing to open) branches, we are making a stifling effect.” That’s the one thing that has led us to this practice. If that wasn’t strangulation, it would help us grow.”
Murthy said the bank has a fragmented shareholding, and no shareholder, including foreign investors, holds more than 5%. Although it began as a community bank and the bulk of retail shareholding is within the community, its shareholders are spread across the country.
“In the past, there were some (acquisition) attempts, but RBI kept its foot down and that is why the bank does not have a majority shareholder. Lowering the stake through IPO will bring more stability to the bank and from listing This will help us to widen the shareholding.”
As per the disclosure of the bank, 37.73 per cent of its paid-up equity share capital or 53.59 million equity shares are under outstanding legal proceedings pending at various fora. In respect of these shares, regulatory authorities including RBI and Enforcement Directorate have initiated proceedings against the bank.
Murthy claimed that although 37.73% of the shares are mentioned in dispute in the regulatory filing, in fact around 20% of the shareholding is disputed and this is attracting the attention of law enforcement authorities. He said that all remaining individual shareholder disputes are outstanding at various forums.
TMB is well capitalized with a Tier-1 Capital Adequacy Ratio of 20.44%. After the IPO, the capital adequacy will increase to around 24 per cent. The bank had registered a jump of 36% in net profit 821.91 crore at the end of March, as compared to 603.3 crore a year ago. The bank’s current and savings account ratio (CASA) of total deposits stood at 30.5% at the end of March.
The bank fixed the price band on Tuesday: 500-525 per share for IPO. TMB, which assumed the present name in 1962, will issue 15.8 million new equity shares of 10 face value in the IPO, which is 10% of its equity shares.
TMB is one of the oldest private sector banks in India with a history of 101 years, founded in 1921 as Nadar Bank. The bank provides a wide range of services to mainly micro, small and medium enterprises apart from agriculture and retail customers.
Its general manager, accounts, Surya Raja, said these three verticals make up more than 80% of its business, and 99% of which are secure.
Axis Capital, Motilal Oswal Investment Advisors and SBI Capital Markets are the book-running lead managers of the public issue. The equity shares will be formally listed on BSE on September 15.
(with inputs from PTI)
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