Tamilnad Mercantile Bank (TMB) is setting the stage for its next phase of growth by strengthening its core MSME franchise, preparing for a measured entry into co-lending, and gradually expanding its footprint beyond Tamil Nadu, even as it maintains a conservative risk posture.
The bank is gearing up to enter the co-lending space, but management has underlined a cautious, infrastructure-led approach. While TMB has already tied up with NBFC partners and completed its first tie-up, meaningful scale will come only after the co-lending and pool purchase management platforms are fully operational.
According to Managing Director and CEO Salee S. Nair, the bank is prioritising systems and controls over speed. The platform is expected to be in place during the current quarter, with visible co-lending expansion likely from the next financial year.
TMB is refocusing on its traditional strength namely, MSME lending, after investing time in upgrading systems and processes. The bank has fully operationalised Credit Management Centres (CMCs) in Thoothukudi and rolled them out in a hybrid model across its remaining 11 regions.
Enhanced credit channels and strengthened relationship management have given the bank confidence to pursue substantial MSME-led growth, a trend that is already reflecting in its performance. Management reiterated that MSME will remain a core growth engine.
Gold loans continue to be TMB’s “bread and butter”, providing balance sheet stability and helping absorb the impact of repo rate cuts. Beyond this, the bank is sharpening its retail focus on housing loans and car loans, segments that have underperformed so far. To revive growth, TMB is revamping its retail strategy through builder tie-ups for home loans and dealer partnerships for car loans. While management described this as a story yet to fully unfold, it expects momentum to build in the coming quarters.
TMB is also selectively re-entering the corporate and mid-corporate segment. While retail, agriculture and MSME (RAM) remain the dominant focus, having delivered 18.29% year-on-year growth, the bank does not intend to exit corporate lending entirely. Corporate exposure is expected to remain within the 6–10% range, with lending directed at acceptable mid-corporate borrowers and backed by collateral, ensuring adequate recourse and risk containment.
On the network front, TMB has opened 36 branches in the current year so far, including 13 branches outside Tamil Nadu, about 26% of total additions. Over the next five years, the bank aims to increase the share of non-Tamil Nadu branches to 35% or more. Expansion will remain geographically calibrated, with a focus on Kerala, Karnataka, Maharashtra, Gujarat, and select Tier-2 Telugu states. This gradual shift is designed to diversify the bank’s geographic footprint while retaining its southern stronghold.