The Tamilnad Mercantile Bank Story
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ICMR HOME | Case Studies Collection
Case Details:
Case Code : BSTR017
Case Length : 6 Pages
Period : 1998 - 2002
Organization : Tamilnadu Mercantile Bank
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Banking and Finance
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"As far as I am concerned, the issue is purely commercial. If the Nadars really want to own the bank, they should raise the needed money."
- Sivasankaran, Chairman, Sterling Computers, in May 1998.
Introduction
In January 1998, a meeting was scheduled between the representatives of Nadar Mahajana Bank Share Investors' Forum (NMBSIF)1 and Shashi Ruia, the Managing Director of the Essar Group of companies.2
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The meeting, arranged by the then Tamil Nadu Chief Minister M. Karunanidhi, was held to put an end to the tussle over the control of Tamilnad Mercantile Bank (TNMB).
At the meeting, the Nadars were surprised to learn that Sivasankaran (Siva) the Chairman of Sterling Computers would be attending the meeting instead of Shashi Ruia.
Siva revealed that he had bought the Ruias' stake in TNMB in October 1997 in the meeting. The Nadars were taken aback by the secret deal between Siva & Ruia and they took out a massive rally in Chennai to submit a memorandum to the Reserve Bank of India (RBI) to stop the transfer of TNMB shares to Siva a few days after the meeting.
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The rally turned violent as the Nadars went on a rampage, damaging public/private vehicles and shops.
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The violence in the rally was another dramatic twist in the story of the Nadar community's struggle to retain control over TNMB. The issue attained political overtones in Tamil Nadu as the Nadars had strong political backing. (The Nadars constitute a significant percentage of the electorate in southern Tamil Nadu). Apart from Sharath Kumar (a Nadar actor turned politician) of Dravida Munnethra Kazhagam (DMK), J. Jayalalitha, the All India Anna Dravida Munnetra Kazhagam (AIADMK) leader also campaigned for the Nadars' cause. The TNMB issue was even included in the election manifesto of AIADMK in the 1998 parliamentary elections in Tamil Nadu. The controversy was the first of its kind in India never before had a community fought so relentlessly with the corporate sector to wrest control of a business, reportedly for 'sentimental' reasons... |
The Tamilnad Mercantile Bank Story
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