RBI rejects candidates proposed by Tamilnad Mercantile Bank for MD & CEO position

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The Reserve Bank of India (RBI) has rejected three candidates proposed by Tamilnad Mercantile Bank (TMB) for the post of Managing Director and Chief Executive Officer of the company. Further, the central bank has appointed its Thiruvananthapuram-based Regional Director Thomas Mathew as an Additional Director on the board of TMB.

RBI said the candidates proposed by the Thoothukudi-headquartered TMB were not found suitable, per the private sector bank’s regulatory filing. The bank was asked to submit fresh panel of candidates with suitable experience.

TMB’s Board of Directors, in its meeting held on November 22, 2023, had finalised the names of three candidates for the position of MD & CEO of the bank.

S Krishnan, who took charge of the bank on September 4, 2022, resigned as MD & CEO on September 28, 2023, citing personal reasons. However, he continues to helm the bank as fresh appointment has not taken place so far.

The resignation came in the backdrop of a technical glitch, which led to a wrong credit of ₹9,000 crore into a taxi driver’s account in September 2023.

The bank then said the NACH (National Automated Clearing House) credit file received from NPCI (National Payments Corporation of India) had some invalid account numbers and in some cases, the account numbers were of 16 digits, instead of correct 15 digits.

Also read: TMB shareholder appeals Madras HC to direct RBI to give nod for new MD appointment

“When the file was processed in NACH application, the amount field got prefixed with one digit (9) and the file was uploaded in CBS.

“The mistake was noticed immediately and the entries were reversed. We have now introduced additional checks for authorising the NACH credit transactions. There is no financial loss to the bank in this regard,” per TMB’s September 2023 regulatory filing.

In an analyst call in October 2023, Krishnan clarified: “What happened has nothing to do with the cyber security. It was a technical glitch because of which this wrong credit has come. Now, what we have done is, we have done a root cause analysis as to what and how it went wrong. And we have plugged all those things, put in place a system that it doesn’t recur any more.

“Proper checks and balances additionally have been put in place. So, we hope that this will not recur…the reconciliation team was so sound and robust that within 15 minutes, we could able to immediately identify and take actions to reverse the amount.”

Meanwhile,  RBI has appointed Thomas Mathew, Regional Director of RBI’s Thiruvananthapuram Regional Office, as an Additional Director of TMB for a period of two years from April 12, 2024 to April 11, 2026 or till further orders, whichever is earlier., in place of .S.B. Suresh Kumar, General Manager (retired), RBI.