No SFTs filed to deposits of over ₹2,700 crore: I-T reports violations by Tamilnad Mercantile Bank

The Tamilnad Mercantile Bank (TMB) has not filed statement of financial transactions (SFTs) pertaining to cash deposits of over ₹2,700 crore involving more than 10,000 accounts, said the Income Tax (I-T) department, according to a report by The New Indian Express.

The I-T department said that during verification at the bank to address reporting entity compliance issues, officials also found discrepancies in specified credit card payments involving total transactions worth ₹110 crore, dividend distribution of more than ₹200 crore, and shares issued for over ₹600 crore, the report added.

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Further, SFTs filed by the bank were found incomplete in several respects. The bank had failed to report major transactions that included interest payment of more than ₹500 crore, time deposits, cash deposits, and withdrawals in current accounts, according to the report.

The verification also revealed defective filing of Form 61B for Automatic Exchange of Information (AEOI) about account holder who are “resident” of other countries. TMB officials could not be reached for their comments. Usually, information is received about financial transactions of taxpayers from reporting entities, such as banks, forex dealers, and sub-registrars, according to the report.

The private sector lender posted a 11.45 per cent rise in its net profit for the fourth quarter ended March 2023 at ₹253 crore, supported by a decline in bad loans. The bank had earned a net profit of ₹227 crore for the year-ago period. The total income during the quarter rose to ₹1,204 crore, from ₹1,200 crore a year ago, TMB said in a regulatory filing.

Interest income grew to ₹1,070 crore during the quarter, compared to ₹986 crore in the same quarter a year ago. The board of directors have recommended a dividend of 100 per cent of which 50 per cent has already been paid in March 2023 as interim dividend, it said.

Gross non-performing assets (NPAs) were reduced to 1.39 per cent of gross advances as of March 31, 2023 from 1.69 per cent by the end of March 2022.

The net NPAs also came down to 0.62 per cent from 0.95 per cent. The fall in bad loans ratio helped cut the provisions towards NPAs and contingencies for Q4FY23 to ₹57 crore from ₹146 crore a year ago.