Tamilnad Mercantile Bank, in response to a media report published on January 23, 2025, has issued a formal clarification to stock exchanges. The news, which claimed that the Reserve Bank of India (RBI) had imposed a penalty of Rs. 1.31 crore on the bank for non-compliance, was deemed false and baseless. The bank stated that no such event or penalty was imposed in the reported timeframe.

The article, which was published on smallnews.in, stated that the RBI had penalized Tamilnad Mercantile Bank for failing to comply with regulatory requirements. However, the bank clarified that no communication has been received from RBI regarding any new penalty. They emphasized that a monetary penalty of Rs. 1.31 crore was indeed imposed by RBI on March 19, 2024, based on findings from the statutory inspections for Supervisory Evaluation for the financial year 2022. The bank had already disclosed this penalty to the stock exchanges in 2024.

The Inaccuracies in the Report
The media report also included several inaccuracies about the bank’s history and operational details. The report incorrectly referred to the bank as "formerly known as Indian Mercantile Bank," whereas its original name was "Nadar Bank Limited." Additionally, it incorrectly identified the bank as a "Chennai-based private-sector bank" when it is actually based in Thoothukudi (Tuticorin), Tamil Nadu. Another error was the claim that the bank was part of the MSN & Associates group, which is untrue as the bank operates independently. Lastly, the report overstated the bank’s market capitalization, quoting it as over Rs. 11,000 crores, whereas the accurate figure is around Rs. 7,000 crores.

The clarification from the bank strongly denied these claims and confirmed that there was no impact on the bank’s financial performance or market position as a result of the false report.

RBI’s 2024 Penalty Details
As mentioned earlier, the RBI had indeed imposed a monetary penalty of Rs. 1.31 crore on Tamilnad Mercantile Bank in 2024, but this was related to regulatory non-compliance issues observed during the statutory inspection for the year 2022. The violations included failing to benchmark interest rates on certain MSME loans to an external benchmark lending rate, adopting multiple benchmarks within the same loan category, and incorrectly reporting the external ratings of certain borrowers. The RBI penalty was imposed in line with its regulatory powers under the Banking Regulations Act of 1949.

The penalty was not related to the current period or the unsubstantiated news report in January 2025. The bank has already taken corrective measures to address the issues raised by RBI and is aligned with the required procedures.

No Impact on Trading or Financial Health
The bank also confirmed that no significant movement in share trading occurred as a result of the false media report. There has been no material impact on the bank’s financial standing or operations. The clarification has put to rest any concerns about the false news report and reaffirmed the bank’s commitment to regulatory compliance.

Looking Ahead
The bank continues to focus on improving its operations and ensuring that all regulatory requirements are met. Tamilnad Mercantile Bank has also stressed its efforts in maintaining transparency with its stakeholders, including investors and regulatory bodies.

In conclusion, the recent media report about an RBI penalty is entirely unfounded, and the true events regarding the RBI’s 2024 penalty have already been disclosed. The bank remains committed to adhering to all banking regulations and ensuring its continued growth and success.

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