Thoothukudi-based Tamilnad Mercantile Bank Ltd (TMB)’s Managing Director and Chief Executive Officer Krishnan Sankarasubramaniam has resigned, citing personal reasons.
His resignation came a week after the bank inadvertently transferred ₹9,000 crore to the account of a Chennai taxi driver. The transaction was soon reversed.
“Though I still have about 2/3rd of the term to go, due to personal reasons, I have decided to resign as Managing Director and CEO of the bank. However, in as much as the bank has only one full-time Director, I will seek the guidance of the RBI in this regard,” Sankarasubramaniam stated in his resignation, on Thursday, 28 September.
Accepting the resignation, the bank’s board forwarded the letter to the Reserve Bank of India (RBI) for its guidance/advice, TMB said in a regulatory filing.
The shares of TMB ended at ₹540.75, up by ₹2.50 or 0.46 percent on the BSE on 27 September.
On 18 August 2022, the RBI approved Sankarasubramaniam’s appointment as the Managing Director and CEO, with effect from 4 September 2022 for three years.
He served as the MD and CEO of the Punjab & Sind Bank from 4 September 2020 to 31 May 2022. He was instrumental in the bank’s turnaround, leading to the institution registering the highest-ever profit in the 2021-22 financial year.
Previously, Sankarasubramaniam had served as the executive director of Canara Bank and Syndicate Bank.
The ₹9,000-crore surprise
On 20 September, the bank transferred ₹9,000 crore to the account of a Chennai-based cab driver, Rajkumar, originally from Palani.
Shocked by the huge amount in his account, he withdrew ₹21,000 to confirm the deposit. However, the bank reversed the transaction within 30 minutes. The next day, the bank officials met Rajkumar and offered him the ₹21,000 he had withdrawn as a gift. They asked him not to share the information with anyone.
However, Rajkumar preferred a complaint with the Chennai City Police.
After the complaint was filed, TMB clarified that the NACH (National Automated Clearing House) credit file received from NPCI (National Payments Corporation of India) had some invalid account numbers. In some cases, the account numbers were 16 digits, instead of the correct 15, it said.
“When the file was processed in the NACH application, the amount field was prefixed with one digit (9) and the file was uploaded to CBS (Core Banking Solution). The mistake was noticed immediately and the entries were reversed,” the bank explained.
I-T inspection at HQ
The bank grabbed headlines when the Income Tax Department inspected its headquarters in Thoothukudi in June this year.
Following the inspection, the bank explained that the Intelligence and Criminal Investigation Directorate of Income Tax was conducting a spot verification of statutory compliances.
The bank’s gold loan portfolio stood at ₹10,500 crore. Founded in 1921, TMB is one of the oldest banks in Tamil Nadu.