[sbinews] TMB may be merged with PSB

  • From: sbistcbangalore@xxxxxxxx
  • To: sbinews@xxxxxxxxxxxxx
  • Date: Tue, 23 Dec 2003 07:14:19 +0500

RBI may merge TMB with Nationalised Bank

CHENNAI: The order passed by the Company Law Board suspending the board of the 
Tamilnad Mercantile Bank (TMB) has triggered speculation in banking circles on 
the next move by banking authorities. 

The Nadar Mahajana Bank Share Investors Forum led by B Ramachandra Adityan is 
nurturing hopes of retrieving the bank, which the community lost first to Essar 
in 1994 and later to NRI C Sivasankaran of the Sterling Group. 

However, a section of the Nadar group feels the RBI might take the bull by 
horns by merging the bank with another bank in view of the raging fight among 
the Nadar groups and the difficulty in ensuring the smooth functioning of the 

It is said that though RBI does not have powers under the Banking regulation 
Act to supersede the entire board, it has powers of amalgamation. In fact, in 
its latest application before the CLB, Department of Company Affairs pointed 
out that the last  annual general meeting of TMB was held in 1996. 

It also said the financial position of the bank is affected. The damage can be 
arrested only through appropriate intervention to change the management, DCA 
said. As the holding of AGMs is also complicated due to non-resolution of share 
transfer issue, it pressed for appointing majority government directors on the 

Informed sources said government and the RBI might intervene to find a solution 
by merging it with a nationalised bank. Given its strong reserves and assets, 
TMB is a good bet for any acquirer for an investment of   Rs 225 to Rs 300 
crore. All those who had bought the shares could be paid at the rate of Rs 
8,250 per share. 

There is another reason for a possible intervention by the authorities. 
Earlier, RBI did not clear the share transfer to Essar group though CLB had 
upheld the friendly acquisition. RBI is still buying time on deciding the share 
transfer to NRI Sivasankaran due to a court order.  

Even if it clears his stake, he is bound to enrich himself by selling the block 
to interested parties, the sources said. 

In the past, the RBI had imposed moratorium on several private banks in public 
interest and later merged them with PSU banks. 

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