To address Current Account and Savings Account (CASA) deposit challenges, Tamilnad Mercantile Bank has launched several initiatives, including a transaction business unit targeting current accounts, a global NRI centre for NRI deposits, and a daily services group to engage high-net-worth clients, said MD and CEO Salee S Nair.
The company has faced challenges with CASA deposits, with overall deposit growth at 8.43 percent, below market levels, though trending upwards.
Commenting on this, Nair said, “we are confident of aligning with market standards by FY26.”
To address CASA challenges, he said, we have launched several initiatives, including a transaction business unit targeting current accounts, a global NRI centre for NRI deposits, and a daily services group to engage high-net-worth clients.
Additionally, the bank is also revamping its digital banking offerings, including internet banking.
Despite anticipated rate cuts (two already occurred this year), “we project the cost of deposits to be between 5.8 percent and 5.995 percent in FY26,” Nair said.
Nair also said the lender aims to grow its advances by at least 15-18 percent in FY26.
To achieve this growth in advances, Nair said, we are focusing on key sectors such retail, agriculture, and MSME (RAM) sectors, with significant contributions from MSME and retail.
“We have implemented process improvements, despite some challenges in the last quarter and expected in Q1 FY26, to reduce turnaround times for customer onboarding.
Moreover, he said, “We have identified past customers lost due to slow responses and are addressing this with a robust relationship management team targeting both retail and MSME markets.”
The bank has been restructured into four verticals, including MSME, gold loans, retail (housing and car loans), and trade finance, each with clear budgetary targets and resources to drive advances growth.
On Net Interest Margins, MD and CEO Salee S Nair said the company anticipates NIM to range between 3.80 percent and 3.90 percent down from the current 4 percent.
“To source high-quality advances, some pricing moderation is necessary, which contributes to the expected NIM range of 3.80 percent to 3.90 percent while maintaining the quality of new accounts,” Nair said.
Nair attributed the reasons for compression of Net Interest Margins (NIMs) to the rising cost of deposits, which increased by 17 basis points, while the yield on advances saw a more subdued rise.
This imbalance led to the observed compression, he said.
He also said the lender will open 50 branches in FY26, with most established in the first two quarters and any remaining by the third quarter, ensuring all are operational by December 31.
Out of the 50, he said, 25 will be in Tamil Nadu, with the other half outside the State.
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