TMB yet to pay Rs 70 cr dividend to shareholders

Bank announced 9000% dividend, highest in the industry

Tamilnad Mercantile Bank (TMB), which has been declaring a high level of dividends to its shareholders, has not paid dividend to the tune of Rs 70 crore to its shareholders, as four annual general meetings (AGM) of the bank were not held due to legal disputes between the shareholders.

Shareholders from the bank said since AGMs for 2009-10, 2010-11, 2011-12 and 2012-13 were not held, the bank did not pay dividend to the tune of Rs 70 crore to them. The AGMs were not held since shareholders, including foreign institutional investors (FIIs), are fighting over voting rights at various courts.

The latest development is that FII holdings to the tune of 32 per cent had been frozen by the Madurai bench of the Madras High Court and recently, one of the shareholders filed a petition at the Madras High Court related to the tenure of additional directors in the bank.

Due to the ongoing disputes, several important decisions, including the initial pubic offer, have been held over.

<B>Bank’s performance</B><BR>
While refusing to comment on the ownership dispute, TMB's managing director and chief executive officer KB Nagendra Murthy said the bank’s business got impacted due to poor credit growth.

According to him, credit to deposit (CD) ratio dipped to 78 per cent during the quarter ended September 30, 2013, from 85 per cent. “Around Rs 1,400 crore credit was not happening,” he said.

“Non-performing assets (NPA) is an issue. In a downturn, the first hit will be on corporates and then on lenders,” said Murthy, adding, it won’t go bad as either it will opt for restructuring or CDR.

Gross NPA, which was at 1.31 per cent as at the end of March 31, 2013, increased to 1.93 per cent as at end of September 2013. Net NPA was up to 0.98 per cent from 0.66 per cent. Provisioning coverage ratio was at 66.27 per cent as at the end of Sept 2013 from 71.31 per cent. Dividend payout (annualised) was at 14.98 per cent during the period.

Ninety two-year-old TMB, which started the fiscal with a target of 24 per cent growth in total business over Rs 36,000 crore in 2012-13, now said  it may not grow beyond 15 per cent.