The Hindu Business Line : TMB Managing Director gets another extension

Tamilnad Mercantile Bank's Managing Director Mr G. Narayanamoorthy, whose term has been extended twice already, has got an extension of one more month, courtesy the intervention of the Madras High Court.

Last week, a case pertaining to the bank (the voting rights of foreign investors being challenged by another group of shareholders) that has been pending for over 11 months before the Madras High Court came up for hearing.

The Court expressed concern over the expiry of the term of the bank's Managing Director Mr Narayanamoorthy.

Mr Narayanamoorthy's two-year term expired on November 9, 2008. Thereafter, it was extended up to March 31, 2009, and later till end April.

The bank apparently does not have a full-fledged board to oversee its functions. A truncated board with two RBI nominees and the Managing Director is running the show without exercising any policy changes.

It is under such circumstances that the Court is understood to have expressed concern as to who would shoulder the responsibility of managing the bank in the absence of the MD.

The case came up for hearing on April 24 and was postponed to April 28. At this juncture, the Judge thought it fit to ask the banking regulator to extend the tenure of the MD. He has posted the case for June 15.

The RBI, it is reliably learnt, has obeyed these instructions and extended Mr Narayanamoorthy's term by one more month till end of May.

TNMB was incorporated as "Nadar Bank" in 1921. It became a scheduled bank in 1935 and two decades later, in 1962, it came to be known as Tamilnad Mercantile Bank. The Nadar community had all along managed to have a controlling stake in the bank. But differences amongst themselves led to inter-group rivalry and eventually sale of stake to non-Nadars. The community, though, has vehemently resisted any move that diluted their controlling stake.

Shareholding

The latest shareholding position shows that non-Nadars have picked up 24.93 per cent stake in the bank. They include six foreign investors and two Indians. They have paid Rs 171.5 crore for 70,906 shares (at Rs 24,182 a share) to Sterling Group (seller).

Former McKinsey CEO Mr Rajat Gupta picked up 14,080 shares for about Rs 34 crore, Mr Gokul Patnaik bought 10,589 shares for Rs 25.6 crore and Mr Ramesh Vangal's Katra Holdings bought 10,364 shares for Rs 25 crore.

The others who picked up stakes included Mr Ravi S. Trehan (one per cent), Vector Program (4.73 per cent) and Swiss Re Investors (3.56 per cent).

The controversy peaked with the Nadars challenging the voting rights of the foreign investors and election of members on the bank's board. This case is pending disposal before the Madras High Court and is expected to be heard on June 15.

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