Post IPO, Tamilnad Mercantile Bank to continue to focus on RAM segment: MD

“We will be continuing to focus on RAM so that the funds can be utilised judiciously and protect the stakeholders’ interest by way of the ROE and ROA,” says S Krishnan, MD & CEO, Tamilnad Mercantile Bank

Capital adequacy post the IPO will be north of 25%. Do you plan to enter different segments to look for growth? Also what is your growth guidance?
As you rightly said, capital adequacy will increase because of the capital augmentation which has taken place but that will be properly utilised and as far as the business segment is concerned, the bank will continue to focus on the RAM segment.

If you look into the business mix of the bank, the RAM is constituting around 88% of the loan book. We will continue to be focussing on that. It is the core strength of the bank. There is good potential in the RAM segment and if you look into the place where we have a lot of concentration, it is Tamil Nadu again. It is the state which has the second largest GDP in the country and there is good potential there.

We will be continuing to focus on that so that the funds can be utilised judiciously and protect the stakeholders’ interest by way of the ROE and ROA.

Due to RBI’s direction, the listing of your branch expansion plan was on hold but once the bank is listed on the bourses, what are the expansion plans that you have?
Today as it has been listed, we will be approaching the Reserve Bank of India for lifting the ban. If the RBI agrees, then the bank will be going ahead with the branch expansion. Already a plan has been drawn which is being reviewed once again so that the potential symptoms can be identified and we can tap the business. This will be taking place very shortly.

How are you looking at the deposit side? you may eventually need a strong granule CASA ratio currently compared to other listed small and midcap banks the CASA ratio is lower at around 30.5%.
That is why I said as far as the CASA is concerned, compared to the other banks, our CASA is a little less but nevertheless it is not so low compared with some of the players who are operating in that geography. If you look into the nation as a whole, the CASA by and large comes from the eastern and north eastern part of the country.

When we decide on the branch expansion, we will be factoring this as one of the key elements so that we can increase the CASA.

74% of your deposits and 76% of your advances are skewed only to one state. Two years down the line, where do you see this number headed? Also has the bank set an internal target of reducing this exposure to just one state?
Since 80% of presence is in one state, it is natural that the assets or liabilities are also from that place. The concentration of risk is there but the also has high potential. On the asset side, normally there will be a concern but TMB has proved that its underwriting standards are extremely sound and the recovery mechanism is one of the best.

Thereby the NPA ratios have been kept the lowest and going forward, the same will be maintained and that is our aim. Hence the concentration of risk will be properly mitigated going forward as we will be deciding on branch expansion.