Tamilnad Mercantile Bank Seeks RBI Approval to Regularize Past Share Transfers as Board Backs Expansion — October 30, 2026
Old private-sector lender Tamilnad Mercantile Bank (TMB) has approached the Reserve Bank of India (RBI) seeking regulatory approval to regularize certain historical share transfers, Managing Director and Chief Executive Officer Salee S. Nair confirmed. The development comes as the Thoothukudi-headquartered lender works through legacy compliance issues while pushing forward with an ambitious nationwide growth blueprint backed by its board of directors.
The regularization request pertains to past equity transactions that have historically attracted regulatory attention. Alongside this, an adjudication process regarding a separate dispute involving the allotment of bonus shares remains pending before enforcement authorities.
Resolving Governance and Legacy Baggage
The private lender has long been navigating issues stemming from historical shareholding changes dating back decades, which previously led to scrutiny and show-cause notices from the Enforcement Directorate (ED) regarding foreign exchange compliance and bonus equity issuances.
Speaking on the shift within the lender’s operational governance, Nair noted that the internal friction that previously stalled decision-making has been put to rest.
“The kind of friction that we saw between the management and the board in the past is actually past,” Nair stated, emphasizing that the bank’s ongoing transformation and expansion initiatives now have the board’s full support.
The board’s oversight has also been strengthened by regulatory appointments. Under Section 36AB of the Banking Regulation Act, 1949, the central bank appointed retired RBI General Manager R. Kannan as an Additional Director and extended the tenure of C.S. Ram Kumar, also a former central banker, ensuring regulatory continuity and governance rigor across key committees, including risk and audit.
Record Financial Momentum Anchors Expansion
The regulatory outreach unfolds against strong balance-sheet expansion and profitability metrics for the bank.
For the second quarter of the fiscal year, TMB delivered a record net profit of ₹451.14 crore, marking a 42% year-on-year increase on the back of healthy net interest income growth, stable margins, and controlled non-performing assets.
Key balance-sheet highlights include:
- Total Business: Reached ₹1.30 lakh crore, expanding 27.25% compared to the prior-year period.
- Advances Growth: Gross credit expanded 29.37% year-on-year to ₹60,715 crore, supported by strong retail, agriculture, and MSME (RAM) loan distribution.
- Deposit Inflows: Total deposits grew 25.49% year-on-year to ₹69,546 crore, with low-cost CASA balances increasing 16.26% to ₹17,629 crore.
Buoyed by the operating performance, the lender has raised its growth guidance for FY27.
What It Means for Investors
For market participants and institutional investors, regulatory clarity on share transfers is a key prerequisite to de-risking TMB’s capital structure. Historically, valuation multiples for regional lenders such as TMB have traded at a discount owing to unresolved disputes, ownership wrangles, and legal proceedings.
If the central bank grants the necessary approvals and legacy shareholding overhangs are cleared, TMB stands in a stronger position to scale up outside its home state of Tamil Nadu, attract institutional capital, and maintain its return-on-asset metrics.
