Tamilnad Mercantile Bank MD and CEO AK Jagannathan tells Sajan C Kumar that the bank, in all likelihood, hit the capital market soon. He says TMB is keen on expanding overseas with branches in Colombo, Singapore and Malaysia.

What are the new initiatives TMB is taking?

The bank is all set to go paper-less in all regional offices and all branches and will communicate through e-mails. We are seriously pursuing steps on data-mining and analytical management, and have tied up with SAS for installing the software. We want to use the information to evolve new business strategies. To upgrade technology, we are setting up point-of-sale (POS) machines at our branches so that there are no queues at bank counters. Besides, we want to ramp up our e-banking and m-banking verticals significantly, for which we have recruited 470 personnel this year. The bank is also planning to venture into gold coin retailing.

Is there need to raise capital?

The bank has enough capital to use till 2019, and there is no need for an IPO or tier-II bonds, which are costly. The bank, however, wants to go public since RBI was of the view that it should get listed. There are hardly two or three unlisted banks. We will plan the size of the issue and other details once the courts clear the ownership issues. The bank?s shares are said to be selling close to R55,000 in the market. The capital and reserves have increased by 18.99% to R1,366 crore as on March 31, 2011. The capital adequacy ratio of the bank stood at 13.55% without taking into account the current nine months of profit, under Basel-II. So, CAR will be above 15% at the end of the current financial year.

Can you elaborate on bank?s retail push?

TMB has always been a retail bank, there are hardly 10 customers who have been goven loans of R100 crore. We have been consistently opening branches in rural and semi-urban areas, where the population is below 50,000 and no RBI licence is required.

The bank?s current account savings account (CASA) has been a concern growing at 22% to 23% during last three years. We don?t think the recent de-regulation of interest rates on savings accounts has anything do with the not-so encouraging growth of our CASA. Both in savings and term deposits, we have the best interest rates but we are opening more branches. Historically, the branches were in business centres, since we were catering for businessmen but that will change in that we are going to open branches in residential areas .

Any plans to expand overseas?

We have shut shop in Colombo, where we had ventured in 1940 because the operations weren?t viable. But we would like to set up shop in Colombo, Singapore and Malaysia, where the Tamil community, the backbone of bank, has a siezable presence.

We have ready-made customers in these markets that provide us an easy connect. The bank is also focusing more on NRI deposits. We opened a special NRI cell in November last and mobilised R50 crore in two months. We are targetting R500 crore worth of NRI accounts next year and have identified some 30-40 branches in Tamil Nadu and Kerala to mop up NRI savings.