Tamilnad Mercantile Bank : Prospectus (Final Offer Document filed with ROC)

PROSPECTUS

Dated: September 8, 2022

Please read Section 32 of the Companies Act, 2013

100% Book Built Offer

(Please scan this QR code to view the Prospectus)

TAMILNAD MERCANTILE BANK LIMITED

CORPORATE IDENTIFICATION NUMBER: U65110TN1921PLC001908

REGISTERED AND CORPORATE		CONTACT PERSON			TELEPHONE AND EMAIL	WEBSITE
	OFFICE
No. 57, Victoria Extension Road,				Prakash Chandra Panda, Company		Telephone no.: [phone]	www.tmb.in
Thoothukudi - 628 002, Tamil Nadu, India		Secretary and Compliance Officer		Email:[e-mail]
OUR BANK IS A PROFESSIONALLY MANAGED BANK AND DOES NOT HAVE AN IDENTIFIABLE PROMOTER
							DETAILS OF OFFER
Type		Fresh Issue		Total Offer size					Eligibility and Reservations
Fresh Issue		Fresh Issue of	15,840,000 Equity		The Offer was made pursuant to Regulation 6(2) of the SEBI ICDR Regulations.
		15,840,000 Equity				Shares
						For further details, see "Other Regulatory and Statutory Disclosures - Eligibility
		Shares aggregating		aggregating to ₹
				for the Offer" on page 307. For details in relation to share reservation among
		to ₹ 8,078.40*		8,078.40* million
				QIBs, NIBs and RIBs, see "Offer Structure" on page 322.
		million
*Subject to finalisation of the Basis of Allotment

RISKS IN RELATION TO THE FIRST OFFER

This being the first public issue of the Equity Shares of our Bank, there has been no formal market for the Equity Shares. The face value of each Equity Share is ₹ 10. The Floor Price and the Cap Price (determined by our Bank in consultation with the BRLMs), and Offer Price (determined by our Bank in consultation with the BRLMs), in accordance with the SEBI ICDR Regulations and on the basis of the assessment of market demand for the Equity Shares by way of the Book Building Process, as stated under "Basis for the Offer Price" beginning on page 85, should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.

GENERAL RISKS

Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Offer unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in this Offer. For taking an investment decision, investors must rely on their own examination of our Bank and the Offer, including the risks involved. The Equity Shares have not been recommended or approved by the Securities and Exchange Board of India ("SEBI"), nor does SEBI guarantee the accuracy or adequacy of the contents of this Prospectus. Specific attention of the investors is invited to "Risk Factors" beginning on page 20.

BANK'S ABSOLUTE RESPONSIBILITY

Our Bank, having made all reasonable inquiries, accepts responsibility for and confirms that this Prospectus contains all information with regard to our Bank and the Offer, which is material in the context of the Offer, that the information contained in this Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Prospectus as a whole or any of such information or the expression of any such opinions or intentions, misleading in any material respect.

LISTING

The Equity Shares offered through the Red Herring Prospectus and this Prospectus are proposed to be listed on BSE and NSE. We have received in-principle approvals from BSE and NSE for the listing of the Equity Shares pursuant to letters each dated May 25, 2022. For the purpose of this Offer, BSE is the Designated Stock Exchange. A signed copy of the Red Herring Prospectus has been, and a signed copy of this Prospectus shall be, filed with the RoC in accordance with Section 26(4) of the Companies Act, 2013. For details of the material contracts and documents that were available for inspection from the date of the Red Herring Prospectus up to the Bid/Offer Closing Date, see "Material Contracts and Documents for Inspection" beginning on page 350.

BOOK RUNNING LEAD MANAGERS

Axis Capital Limited

Ankit Bhatia/ Pavan Naik

Tel: [phone]

Email:[e-mail]

Motilal Oswal Investment

Ritu Sharma

Tel: [phone]

Advisors Limited

Email:[e-mail]

SBI Capital Markets

Karan Savardekar

Tel: [phone]

Limited

Email:[e-mail]

REGISTRAR TO THE OFFER

Name of Registrar

Contact Person

Email and Telephone

Link Intime India Private Limited

Shanti Gopalkrishnan

Tel: [phone]

Email:[e-mail]

BID/ OFFER PROGRAMME

ANCHOR INVESTOR

FRIDAY,

BID/OFFER

MONDAY,

BID/OFFER

WEDNESDAY,

BIDDING DATE

SEPTEMBER 2, 2022

OPENED ON

SEPTEMBER 5, 2022

CLOSED ON

SEPTEMBER 7, 2022

PROSPECTUS

Dated: September 8, 2022

Please read Section 32 of the Companies Act, 2013

100% Book Built Offer

TAMILNAD MERCANTILE BANK LIMITED

Our Bank was incorporated in the name of 'Nadar Bank Limited' on May 11, 1921 at Thoothukudi, Tamil Nadu as a limited company under the Indian Companies Act, 1913 pursuant to a certificate of incorporation issued by the erstwhile Assistant Registrar of Joint Stock, Palamcottah. Our Bank commenced its business on November 11, 1921 at Thoothukudi, Tamil Nadu. Subsequently, the name of our Bank was changed to 'Tamilnad Mercantile Bank Limited', with effect from November 27, 1962, pursuant to a letter of approval from the Government of India dated November 14, 1962 and a fresh certificate of incorporation dated July 17, 1968 was issued by the Assistant Registrar of Companies, Madras. For further details in relation to the changes in the registered office, see "History and Certain Corporate Matters" beginning on page 157.

Registered and Corporate Office: No. 57, Victoria Extension Road, Thoothukudi - 628 002, Tamil Nadu, India; Tel: [phone]

Contact Person: Prakash Chandra Panda, Company Secretary and Compliance Officer; Tel: [phone]

E-mail: [e-mail]; Website: www.tmb.in

Corporate Identity Number: U65110TN1921PLC001908

OUR BANK IS A PROFESSIONALLY MANAGED BANK AND DOES NOT HAVE AN IDENTIFIABLE PROMOTER

INITIAL PUBLIC OFFERING OF 15,840,000 EQUITY SHARES OF FACE VALUE OF ₹ 10 EACH ("EQUITY SHARES") OF TAMILNAD MERCANTILE BANK LIMITED ("BANK" OR "ISSUER") FOR CASH AT A PRICE OF ₹ 510 PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF ₹ 500 PER EQUITY SHARE) (THE "OFFER PRICE") AGGREGATING TO ₹ 8,078.40 MILLION* (THE "OFFER") COMPRISING A FRESH ISSUE OF 15,840,000 EQUITY SHARES AGGREGATING TO ₹ 8,078.40 MILLION (THE

"OFFER"). THE OFFER CONSTITUTED 10.00% OF OUR POST-OFFERPAID-UP EQUITY SHARE CAPITAL.

THE OFFER PRICE IS ₹510 PER EQUITY SHARE AND THE OFFER PRICE IS 51 TIMES THE FACE VALUE OF THE EQUITY SHARES

* SUBJECT TO FINALISATION OF THE BASIS OF ALLOTMENT

The Offer was made through the Book Building Process, in terms of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended ("SCRR") read with Regulation 31 of the SEBI ICDR Regulations and in compliance with Regulation 6(2) of the SEBI ICDR Regulations, wherein not less than 75 % of the Offer was allotted on a proportionate basis to Qualified Institutional Buyers ("QIBs", the "QIB Portion"). Our Bank, in consultation with the Book Running Lead Managers, allocated 60% of the QIB Portion to Anchor Investors on a discretionary basis in accordance with the SEBI ICDR Regulations ("Anchor Investor Portion"), of which one-third was reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Allocation Price. Further, 5% of the Net QIB Portion was available for allocation on a proportionate basis only to Mutual Funds, and the remainder of the Net QIB Portion was available for allocation on a proportionate basis to all QIBs, including Mutual Funds, subject to valid Bids being received at or above the Offer Price. However, if the aggregate demand from Mutual Funds was less than 5% of the Net QIB Portion, the balance Equity Shares available for allocation in the Mutual Fund Portion could have been added to the remaining Net QIB Portion for proportionate allocation to QIBs. Further, not more than 15% of the Offer was available for allocation to Non-Institutional Bidders ("Non-InstitutionalPortion") of which one-third of the Non- Institutional Portion was available for allocation to Bidders with an application size of more than ₹ 200,000 and up to ₹ 1,000,000 and two-thirds of the Non-Institutional Portion was available for allocation to Bidders with an application size of more than ₹ 1,000,000 and under-subscription in either of these two sub-categories of Non-Institutional Portion may have been allocated to Bidders in the other sub-category of Non-Institutional Portion in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price. Further, not more than 10% of the Offer was available for allocation to Retail Individual Bidders ("Retail Portion") in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price. All potential Bidders (except Anchor Investors) were required to mandatorily utilise the Application Supported by Blocked Amount ("ASBA") process providing details of their respective ASBA accounts, and UPI ID in case of UPI Bidders using the UPI Mechanism, if applicable, in which the corresponding Bid Amounts were blocked by the SCSBs or by the Sponsor Bank(s) under the UPI Mechanism, as the case may be, to the extent of respective Bid Amounts. Anchor Investors were not permitted to participate in the Offer through the ASBA process. For details, see "Offer Procedure" beginning on page 326.

RISKS IN RELATION TO THE FIRST OFFER

This being the first public issue of the Equity Shares of our Bank, there has been no formal market for the Equity Shares. The face value of each Equity Share is ₹ 10. The Floor Price and the Cap Price (determined by our Bank in consultation with the BRLMs), and Offer Price (determined by our Bank in consultation with the BRLMs), in accordance with the SEBI ICDR Regulations and on the basis of the assessment of market demand for the Equity Shares by way of the Book Building Process, as stated under "Basis for the Offer Price" beginning on page 85, should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.

GENERAL RISKS

Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Offer unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in this Offer. For taking an investment decision, investors must rely on their own examination of our Bank and the Offer, including the risks involved. The Equity Shares have not been recommended or approved by the Securities and Exchange Board of India ("SEBI"), nor does SEBI guarantee the accuracy or adequacy of the contents of this Prospectus. Specific attention of the investors is invited to "Risk Factors" beginning on page 20.

BANK'S ABSOLUTE RESPONSIBILITY

Our Bank, having made all reasonable inquiries, accepts responsibility for and confirms that this Prospectus contains all information with regard to our Bank and the Offer, which is material in the context of the Offer, that the information contained in this Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Prospectus as a whole or any of such information or the expression of any such opinions or intentions, misleading in any material respect.

LISTING

The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on BSE and NSE. We have received in-principle approvals from BSE and NSE for the listing of the Equity Shares pursuant to letters each dated May 25, 2022. For the purpose of this Offer, BSE is the Designated Stock Exchange. A signed copy of the Red Herring Prospectus has been, and a signed copy of this Prospectus shall be, filed with the RoC in accordance with Section 26(4) of the Companies Act, 2013. For details of the material contracts and documents that were available for inspection from the date of the Red Herring Prospectus up to the Bid/Offer Closing Date, see "Material Contracts and Documents for Inspection" beginning on page 350.

BOOK RUNNING LEAD MANAGERS

REGISTRAR TO THE OFFER

Axis Capital Limited	Motilal Oswal Investment Advisors Limited	SBI Capital Markets Limited	Link Intime India Private Limited
1st Floor, Axis House	Motilal Oswal Tower, Rahimtullah, Sayani	202, Maker Tower 'E'	C-101, 1st Floor, 247, Lal Bahadur Shastri
C 2, Wadia International Centre	Road Opposite Parel ST Depot,		Cuffe Parade, Mumbai 400 005	Marg,
P.B. Marg, Worli	Prabhadevi, Mumbai 400 025		Maharashtra, India	Vikhroli (West), Mumbai 400 083
Mumbai 400 025	Maharashtra, India		Tel: [phone]	Maharashtra, India
Maharashtra, India	Tel: [phone]		E-mail: [e-mail]	Tel: [phone]
Tel: [phone]	E-mail: [e-mail]		Website: www.sbicaps.com	E-mail: [e-mail]
E-mail: [e-mail]	Website: www.motilaloswalgroup.com		Investor grievance e-mail:	Website: www.linkintime.co.in
Website: www.axiscapital.co.in	Investor	grievance	e-mail:	[e-mail]	Investor grievance e-mail:
Investor grievance email:	[e-mail]		Contact person: Karan Savardekar	[e-mail]
[e-mail]	Contact person: Ritu Sharma		SEBI registration no.: INM000003531	Contact person: Shanti Gopalkrishnan
Contact person: Ankit Bhatia/ Pavan Naik	SEBI registration no.: INM000011005			SEBI registration no.: INR000004058
SEBI registration no: INM000012029
		BID/OFFER PERIOD
BID/OFFER OPENED ON*		Monday, September 5, 2022		BID/OFFER CLOSED ON	Wednesday, September 7, 2022

*The Anchor Investor Bid/Offer Period was one Working Day prior to the Bid/Offer Opening Date.

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TABLE OF CONTENTS
SECTION I: GENERAL......................................................................................................................................	1
DEFINITION AND ABBREVIATIONS........................................................................................................	1
OFFER DOCUMENT SUMMARY .............................................................................................................	11
CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA
AND CURRENCY OF PRESENTATION...................................................................................................	15
FORWARD LOOKING STATEMENTS ....................................................................................................	18
SECTION II: RISK FACTORS ........................................................................................................................	20
SECTION III: INTRODUCTION ....................................................................................................................	59
THE OFFER ...................................................................................................................................................	59
SUMMARY OF FINANCIAL INFORMATION ........................................................................................	60
GENERAL INFORMATION........................................................................................................................	64
CAPITAL STRUCTURE ..............................................................................................................................	72
OBJECTS OF THE OFFER .........................................................................................................................	81
BASIS FOR THE OFFER PRICE................................................................................................................	85
STATEMENT OF POSSIBLE SPECIAL TAX BENEFITS......................................................................	88
SECTION IV ABOUT OUR BANK .................................................................................................................	90
INDUSTRY OVERVIEW .............................................................................................................................	90
OUR BUSINESS...........................................................................................................................................	113
KEY REGULATIONS AND POLICIES ...................................................................................................	138
HISTORY AND CERTAIN CORPORATE MATTERS..........................................................................	157
OUR MANAGEMENT ................................................................................................................................	162
OUR PRINCIPAL SHAREHOLDERS......................................................................................................	182
OUR GROUP COMPANY ..........................................................................................................................	183
DIVIDEND POLICY ...................................................................................................................................	184
SELECTED STATISTICAL INFORMATION ........................................................................................	185
SECTION V: FINANCIAL INFORMATION ...............................................................................................	200
FINANCIAL STATEMENTS .....................................................................................................................	200
OTHER FINANCIAL INFORMATION ...................................................................................................	263
RELATED PARTY TRANSACTIONS .....................................................................................................	264
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION .........................................................................................................................................	265
CAPITALISATION STATEMENT ...........................................................................................................	292
FINANCIAL INDEBTEDNESS..................................................................................................................	293
SECTION VI: LEGAL AND OTHER INFORMATION .............................................................................	294
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS ..............................................	294
GOVERNMENT AND OTHER APPROVALS ........................................................................................	305
OTHER REGULATORY AND STATUTORY DISCLOSURES............................................................	307
SECTION VII: OFFER INFORMATION .....................................................................................................	316
TERMS OF THE OFFER ...........................................................................................................................	316
OFFER STRUCTURE.................................................................................................................................	322
OFFER PROCEDURE ................................................................................................................................	326
RESTRICTION ON FOREIGN OWNERSHIP OF INDIAN SECURITIES.........................................	343
SECTION VIII: DESCRIPTION OF EQUITY SHARES AND TERMS OF ARTICLES OF
ASSOCIATION ................................................................................................................................................	344
SECTION IX: OTHER INFORMATION .....................................................................................................	350
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION.................................................	350
DECLARATION ..........................................................................................................................................	354
SCHEDULE 1 ...............................................................................................................................................	368
SCHEDULE 1A ............................................................................................................................................	384
SCHEDULE 2 ...............................................................................................................................................	397
ANNEXURE A .............................................................................................................................................	399

SECTION I: GENERAL

DEFINITION AND ABBREVIATIONS

This Prospectus uses certain definitions and abbreviations which, unless the context otherwise indicates or implies, or unless otherwise specified, shall have the meaning as provided below. References to any legislations, acts, regulations, rules, guidelines, circulars, notifications, clarifications or policies shall be to such legislations, acts, regulations, rules, guidelines or policies as amended, updated, supplemented, re-enacted or modified, from time to time, and any reference to a statutory provision shall include any subordinate legislation made, from time to time, under such provision.

Offer related terms used but not defined in this Prospectus shall have the meaning ascribed to such terms under the General Information Document. Any other words and expressions used but not defined in this Prospectus shall have the meaning ascribed to such terms under the SEBI ICDR Regulations, the Companies Act, 2013, the SCRA, and the Depositories Act and the rules and regulations made thereunder.

The terms not defined herein but used in "Statement of Possible Special Tax Benefits", "Industry Overview", "Key Regulations and Policies", "Selected Statistical Information", "Financial Statements", "Outstanding Litigation and Material Developments", "Description of Equity Shares and Terms of Articles of Association" and "Offer Procedure" beginning on pages 88, 90, 138, 185, 200, 294, 344 and 326, respectively, shall have the meanings ascribed to such terms in these respective sections.

General Terms

Term	Particular
Our Bank/ the Bank/ the	Tamilnad Mercantile Bank Limited, a company incorporated under the Indian Companies Act,
Issuer	1913 and registered as a bank with the RBI, having its Registered and Corporate Office at No.
	57, Victoria Extension Road, Thoothukudi 628 002, Tamil Nadu, India
we/ us/ our	Unless the context otherwise indicates or implies, refers to our Bank

Bank Related Terms

Term	Description
Articles of Association/	Articles of association of our Bank, as amended
AoA or Articles
Audit Committee	Audit committee of our Board, as described in "Our Management" beginning on page 162
Board/ Board of	Board of directors of our Bank
Directors
Chief Financial Officer /	P.A. Krishnan, chief financial officer of our Bank
CFO
Company Secretary and	Prakash Chandra Panda, company secretary and compliance officer of our Bank
Compliance Officer
Corporate Social	Corporate social responsibility committee of our Board, as described in "Our Management"
Responsibility	beginning on page 162
Committee
Director(s)	The director(s) on our Board
Equity Shares	The equity shares of our Bank of face value of ₹ 10 each
Executive Director(s)	The executive director(s) of our Bank
Independent Directors	Independent directors on our Board, as described in "Our Management" beginning on page
	162
Joint Statutory Central	M/s Suri & Co, Chartered Accountants, and M/s Abarna & Ananthan, Chartered Accountants,
Auditors	the current joint statutory central auditors of our Bank
Key Managerial	Key managerial personnel of our Bank shall have the meaning as set out under Regulation
Personnel or KMP	2(1)(bb) of the SEBI ICDR Regulations and as described in "Our Management" beginning on
	page 162
Managing Director and	Krishnan Sankarasubramaniam, the managing director and chief executive officer of our Bank
Chief Executive Officer/
MD & CEO
Memorandum of	Memorandum of association of our Bank, as amended
Association or MoA
Nomination and	Nomination and Remuneration Committee of our Board, as described in "Our Management"
Remuneration	beginning on page 162
Committee

1