Private lenderTamilnad Mercantile Bank, which has past record of governance lapses, has filed a draft red herring prospectus with markets regulator Sebi to raise money through an initial public offering (IPO). 

The IPO comprises a fresh issue of up to 15.83 million shares and an offer for sale (OFS) of up to 12,505 shares by existing promoters and shareholders. 

The OFS consists of up to 5,000 shares each by D Prem Palanivel and Priya Rajan, up to 1,000 shares by Prabhakar Mahadeo Bobde, up to 505 shares by Narsimhan Krishnamurthy and 500 shares each by M. Malliga Rani and Subramanian Venkiteshwaran Iyer. 

The proceeds from the issue will be used to augment the bank’s tier I capital base to meet future capital requirements.

As of March 2021, the lender is required to maintain a minimum CRAR of 10.875%. Its tier I capital adequacy ratio was at 17.93%.

For FY21, the bank’s gross non-performing assets (NPAs) stood at 3.44% versus 3.62% a year ago. Net NPAs were at 1.98% versus 1.8% a year ago. The CASA ratio improved to 28.52% from 25.85%. 

As of June 30, 2021, the bank has 509 branches, of which 106 branches are in rural, 247 in semi-urban, 80 in urban and 76 in metropolitan centres. Besides Tamil Nadu, it has a presence in Gujarat, Maharashtra, Karnataka and Andhra Pradesh.

The customer base stands at 4.93 million, of which 70% have been associated with the bank for more than five years.

The Tuticorin-based Tamilnad Mercantile Bank, which is one of the oldest private sector banks in the country with a history of almost 100 years, offers a wide range of banking and financial services primarily to micro, small and medium enterprises (MSME), agricultural and retail customers.

Axis Capital, Motilal Oswal Investment Advisors and SBI Capital Markets are lead managers to the issue.