On September 15, 2022, one of the oldest private sector banks in the country from the ‘Pearl City’ of Thoothukudi, was listed on the Indian bourses, after its public issue was oversubscribed 2.8 times. The history of this bank dates back to 1920.
At the sixth conference of the Nadar Mahajana Sangam at Thoothukudi, traders and merchants of the community discussed the need for establishing a bank. On May 11, 1921, the Memorandum and the Articles of Association of the bank were prepared, and the bank was registered as a limited company.
This was the start of Nadar Bank Limited. M.V. Shanmugavel Nadar, a businessman from Aruppukottai, was elected the first chairman of the bank, which was declared open by T.V. Balagurusamy Nadar, then president of the Nadar Mahajana Sangam, on November 11, 1921. The first branch started functioning at the ‘Aana Mavanna Building’ on South Raja Street at Thoothukudi. The bank’s paid-up capital was ₹1.78 lakh.
No easy access to funding
Historical records show that during the early 19th Century, the Nadars were mostly into toddy tapping and palmyra tree climbing. There were a few wealthy landlords and moneylenders.
“Access to funding for starting a business and other purposes was not easily available to the Nadars. They had to struggle under the new caste system and fight hard to come up socially and economically. They were even denied access to temples. This was the time like-minded people from the community came together and stressed the need for educational institutions and a bank that would cater to the community,” according to an elderly functionary of the Nadar Mahajana Sangam.
Education accounted for the largest part of expenditure by the Nadar Mahajana Sangam. The Nadar Bank and other cooperative societies contributed 5% of their profits to the scholarship fund. In November 1962, the name of the bank was changed to Tamilnad Mercantile Bank Limited.
The Sangam at that point became conscious of a casteless society, hence the decision to rename the bank. It wanted banking accessible to everyone and not just to the community.
A. Shidambaranathan, a chartered accountant from Madurai and a former director of the bank, recalled how the bank expanded to other regions. According to him, a branch was opened in Virudhunagar in 1928 but was closed in seven months.
The bank entered Madras (Chennai) in 1934. It also forayed into Colombo, Sivakasi and Tirunelveli, but closed these branches in 1939 for administrative reasons. During 1942-43, the Madras and Theni branches were closed because of the war. But the demand prompted the bank to open a branch at Sivakasi again in 1942 and in Chennai in 1961. Now, the bank has 530 branches across 17 States.
Over the last hundred years, the bank helped several small traders and merchants, who have become big brands and business houses today. One such brand is Hatsun Agro Product Ltd., a leading private-sector dairy. Its founder and chairman R.G. Chandramogan recalled that the initial seed investment for his business was a loan from Tamilnad Mercantile Bank.
“In the 1990s, when we moved from ice cream to dairy and started setting up the Salem plant, we took fresh loans from the bank,” he said. “Now Arun Icecreams has become an international brand. Today, Hatsun Agro has grown into a ₹7,000-crore-plus company from ₹1.1 lakh a year in the 1970s. The foundation was laid by TMB,” he said.
Some of the popular retail brands housed in one of India’s biggest shopping hubs, Theagaraya Nagar in Chennai, also got their loans to set up a business from this bank. A retailer who started out in a small space and now owns several businesses in T. Nagar and across the State said, “Even today, this is one bank which comes in search of the customer, irrespective of who one is. And when you walk into any of the bank branches, the staff will not call you ‘sir’; they will address you as ‘Annan’ (elder brother).”
The bank has also played a crucial role in helping micro, small and medium enterprises, fireworks, printing and match-stick units in the south of Tamil Nadu. Those who have been tracking this bank for a long say that despite its tussles and boardroom wars, it has always remained profitable.
Tamilnad Mercantile Bank did have its share of controversies. In the latter half of the 1990s, two-thirds of the bank shares moved out of the hands of the Nadars to the Ruias of the Essar Group and then to serial entrepreneur C. Sivasankaran. With the Nadars constituting a crucial vote bank, the issue turned political. In fact, Deputy Prime Minister L.K. Advani stepped in to facilitate the share transfer from Mr. Sivasankaran to the community members, under the leadership of B. Ramachandra Adityan, in 2003.
Also Read | RBI slaps ₹60 million fine on Tamilnad Mercantile Bank
The listing of the bank shares testifies to the unity among the community members. The younger generation of the community has also attempted to make TMB a modern and dynamic bank. The IPO had opened the doors for anchor investors such as Bajaj Allianz Life Insurance, Nomura Singapore, Max Life Insurance, Société Générale, Kotak Mahindra Life Insurance, Cholamandalam MS General Insurance, Authum Investment and Alchemy Ventures. They have pumped around ₹363.53 crore into TMB. It took over a decade to make this bank a listed entity.
