Shareholders have misunderstood IPO: S Annamalai

Interview with Chairman,Tamilnad Mercantile Bank (TMB)

The 94-year old Tamilnad Mercantile Bank (TMB) is one of the oldest and profitable private sector banks in the country, despite issues relating to board occupancy. The bank reported six per cent growth at Rs 402.16 crore in 2015-16 from Rs 379.40 crore, a year ago. In his first interview after taking over as the chairman of TMB in March, S Annamalai spoke to T E Narasimhan at the bank's headquarters in Thoothukudi, on the board's vision and the way forward. Edited excerpts:

What are the immediate priorities for the new Board?

We have a good team of directors and professionals who are looking at the interest of the shareholders. We have started taking efficient decisions on advances to reduce non-performing assets (NPAs) and we are aiming at much better profit this year. Also, we are following Reserve Bank of India (RBI) regulations for sector-wise advances. The bank will not look at high-ticket advances to be careful and to reduce NPAs. There have been issues in sectors like infrastructure and aviation.

What sort of growth are you looking for?

We are looking for faster growth. For 2016-17, we are aiming for 10 per cent.

Does the Bank need capital for the growth?

Capital adequacy, as of now, is not a big issue.

The bank's IPO did not get interest from most of shareholders. Will it affect growth? Why are shareholders not allowing the bank to go for an initial public offering (IPO)?

As the bank's MD and CEO (H S Upendra Kamath) said, this will not affect the bank, as it is adequately capitalised for the present and can take care of growth for two-three years. We plan to educate shareholders on the need for additional funds, for faster growth, plus the benefits of an IPO. For example, the value of shares will go up, exit routes will be freely available. Currently, it is not easy to sell shares. We are confident that in the next one or two years, shareholders will approve the IPO. In today's times, shareholders have misunderstood IPO. We have to educate them. People think they will lose everything, but it adds value to shares. Right now, we have dematerialised the shares to help transfer.

What will be the focus areas for the Banks?

We would like to be more digital, retailer and customer friendly. And our increased focus will be on micro, small and medium enterprises.

Do you think that having a community tag is a challenge?

No. Especially, when it comes to performance. There is no community in this. Today, customers for the banks are everywhere. We have and expect more diversified customers.