We want to go for corporate, SME advances in a big way

Written by Sajan C Kumar | Updated: Dec 26 2009, 05:01am hrs
After resolving the legal wrangling for the control of the bank by factions of Nadar business community, the Tuticorin-based private sector Tamilnad Mercantile Bank is busy chalking out aggressive growth plans to make up for the lost time. The 16-month old feud came to an end last month with Madras High Court ordering reinstatement of the 10 board members whose election were challenged by the rival group. The new director board appears to be open to adopt new business paradigm in order to infuse fresh energies into banks operations. Managing director and CEO of the bank Nagamal Reddy, in an exclusive interview with FEs Sajan C Kumar shares the road map for transforming the bank into a new-generation one. Excerpts.

It would have been a difficult 16-month phase for the bank with a truncated board in place and legal wrangles haunting the bank.

Though litigation had cast a shadow on banks brand, it could post impressive financial performance even during the turbulent phase. The total business of the bank increased to Rs 1,6747.97 crore as on September 30, 2009 from Rs 1,4113.41 crore of September 30, 2008. When you compare the 2009 and 2008 figures, deposits have increased to Rs 9774.45 crore from Rs 8079.79 crore, registering a growth of 20.97%. Likewise, advances have increased to Rs 6973.53 crore from Rs 6033.62 crore, recording a growth of 15.58%. Most significantly, the networth of the bank has crossed the Rs 1,000-crore mark and our CRAR has stood at 14.3% which is well above the statutory requirement of 9%.

What are your major thrust areas to ignite growth

The bank has set a medium-term vision to achieve Rs 50,000 crore business with Rs 500 crore net profit by 2013. In short-term, say by March 2010, our target would be to achieve a business of Rs 20,045 crore along with Rs 183 crore in net profit. We have applied for 68 branches of which 38 will be in Tamil Nadu. In order to shed the image of a conservative Tamil Nadu-based bank, we will open more branches. In Maharashtra, the bank has planned three new branches. Also, the bank wants to go for corporate and SME advances in a big way. The bank had lent Rs 1,351 crore to SMEs as on November 21. We will open specialised cells for SME financing. The corporate advance book of the bank was Rs 2,456 crore. Further, the bank will take steps to improve its export advances and the rate of interest has been slashed for that segment. A Gold Card scheme for exporters is also in the offing.

You are targeting Rs 50,000 crore business by 2013. Do you need to go for capital enhancement

We may consider various options to raise capital. The board would decide an appropriate mode. There is no opposition for going for public issue as has been perceived by certain quarters. The bank has been in the hands of Nadar community and the talk about outsiders gaining entry in the event of bank going public does not hold good.

Will operations be restructured

The bank will weigh various options to improve its operational efficiencies. We plan to rope in a consultant,too. A decision would be taken in the next director board meet and the annual general meeting on January 6. As part of the recast plan, we will infuse young potential into our staff. We need to recruit at least 500 people from clerical to top management level.