Tamilnad Merchantile Bank files for IPO on its 100th anniversary and points to the sorry state of corporate archiving in India

Tamilnad Merchantile Bank completes its 100 years in 2021. The Bank started as Nadar Bank and then changed its name to Tamilnad Merchantile Bank in 1962.  Post-1991, one objective was to push Indian banks to list on stock exchanges. However. TMB has avoided the listing as promoters wanted to control the bank.

TMB has been under trouble and under controversy lately and could not avoid not listing anymore. Thus, TMB filed for its IPO document with SEBI yesterday (the file might take time to download).  Vishwanath Nair reported of the IPO in Bloomberg Quint and also added that the bank is riddled with serious governance issues. There is a reason it did not want to list.

As a student of banking history, what caught my eye was this mention of missing records at the Bank:

Some of our corporate records are not traceable and we have limited knowledge and records of documents relating to corporate actions undertaken by our Bank. These corporate records may not be available in future and we may be subject to penalty imposed by the competent regulatory authority in this respect.

We are unable to trace copies of certain corporate records and filings made by our Bank in the past. In particular, we have been unable to trace:

(i) resolutions for issue and allotments of Equity Shares from our incorporation on May 11, 1921 till June 23, 1989;

(ii) filings with the RoC from incorporation of our Bank on May 11, 1921 till December 16, 1982 in relation to changes in our issued, subscribed and paid up share capital;

(iii) resolutions passed and filings with RoC in relation to change to the registered office of our Bank on February 10, 1936 and resolutions passed in relation the change in the registered office of our Bank on June 7, 1991;

(iv) any records in relation to the commencement of business on November 11, 1921;

(v) letter of intimation from RBI for inclusion of the name of our Bank in the Second Schedule of the RBI Act; and

(vi) copies of the RBI approvals obtained for opening of certain branches of our Bank. The relevant documents are also not available at the office of the Registrar of Companies, Tamil Nadu, based on the search performed by a practicing company secretary.

Consequently, disclosures in this DRHP in relation to changes in our issued, subscribed and paid up share capital at the time of incorporation and on December 16, 1982, December 29, 1982, May 20, 1989 and June 23, 1989 have been made in reliance of the Memorandum of Association, the relevant Form-2 filings made by our Bank with the RoC and our balance sheet as at December 31, 1982.

Amazing.

Based on the above, it seems much of the bank history is wiped out. A 100 year old business/banking institution will have interesting lessons to offer, but without any historical records, how can one document any such history?

TMB is hardly the only institution which suffers from this problem. This apathy of not preserving records and archiving them runs across most businesses in India.

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