Tamilnad Mercantile Bank (TMB) has been hit with a penalty order of Rs 11.44 lakh from the Assistant Commissioner of Income Tax, TDS Circle, Madurai, for the assessment year 2013-14. The penalty, issued under sections 271C and 274 of the Income Tax Act, comes after the Income Tax Appellate Tribunal (ITAT) dismissed the bank's appeal.

Penalty Details

The penalty stems from TMB's failure to deduct Tax Deducted at Source (TDS) on interest payments to depositors that exceeded the maximum non-taxable limit. This occurred despite the bank receiving Form 15G/15H from the depositors, which are typically used to claim exemption from TDS.

Bank's Response

In a regulatory filing, TMB stated that it plans to challenge the order in the appropriate forum within the prescribed timelines. The bank has expressed confidence that the penalty will not have a significant impact on its financials, operations, or other activities beyond the penalty amount itself.

Regulatory Compliance

The incident highlights the importance of strict adherence to tax regulations, particularly for financial institutions handling large volumes of transactions. It serves as a reminder for banks to maintain robust systems for TDS compliance, even when dealing with seemingly exempt transactions.

Financial Performance

Despite this setback, TMB has reported strong growth in its recent business update:

These figures indicate that TMB continues to show robust growth across key financial metrics, suggesting that the penalty is unlikely to significantly impact the bank's overall financial health.

As the bank prepares to contest the penalty order, stakeholders will be watching closely to see how this regulatory challenge unfolds and whether it leads to any changes in TMB's internal processes for tax compliance.

Tamilnad Mercantile Bank (TMB) has announced impressive growth across its key business segments for the second quarter. The bank's performance demonstrates strong momentum in its core operations, with double-digit growth in total business, advances, and deposits.

Total Business Surges Past ₹1 Lakh Crore Mark

TMB's total business reached a significant milestone, crossing the ₹1 lakh crore mark to stand at ₹1,02,417.00 crores. This represents a substantial year-on-year growth of 11.47% compared to ₹91,875.00 crores reported in the same period last year. The bank also showed quarter-on-quarter growth of 3.53% from ₹98,923.00 crores.

Robust Growth in Advances and Deposits

The bank's total advances grew to ₹46,996.00 crores, marking a 10.49% increase from the previous year's figure of ₹42,533.00 crores. On a sequential basis, advances improved by 4.16% from ₹45,120.00 crores.

Total deposits stood at ₹55,421.00 crores, showcasing a strong year-on-year growth of 12.32% compared to ₹49,342.00 crores. The quarter-on-quarter growth in deposits was 3.01%, up from ₹53,803.00 crores.

CASA Performance

TMB's Current Account Savings Account (CASA) deposits, an important indicator of a bank's ability to gather low-cost funds, reached ₹15,163.00 crores. This represents a year-on-year growth of 9.30% from ₹13,873.00 crores and a quarter-on-quarter increase of 5.22% from ₹14,411.00 crores.

Key Performance Indicators

The bank's consistent growth across all key metrics indicates a robust performance in the second quarter. TMB's ability to expand its business volume, coupled with growth in both advances and deposits, suggests a positive outlook for the bank's operations.

It's worth noting that these figures are provisional and subject to limited review by the bank's Statutory Central Auditors. As Tamilnad Mercantile Bank continues to strengthen its market position, investors and stakeholders will likely keep a close eye on the bank's performance in the coming quarters.