Tamilnad Mercantile Bank Ltd Directors Report

DIRECTORS REPORT FOR THE YEAR 2025-26

The Board of Directors have great pleasure in presenting the 104^th Annual Report on the operations of the Bank, together with the Audited Financial Statements as on March 31, 2026, along with the Cash Flow Statement for the year ended March 31, 2026.

1. Business Performance

The Bank in its 104^th year of existence had delivered an excellent performance in all spheres of its operations. During the year under review, the total business had increased from 598,054.49 Crore to 51,15,091.27 Crore registering a growth of 17.37%.

Performance Highlights:

• Operating profit increased from 51,745.74 Crore to 51,855.23 Crore (+6.27%).

• Net profit Increased from 51,182.61 Crore to 51,337.55 Crore (+13.10%).

• Deposits increased from 553,688.96 Crore to 561,712.35 Crore (+14.94%) during the year.

• Gross Advances increased from 544,365.52 Crore to 553,378.92 Crore (+20.32%) during the year.

• Net Advances increased from 543,983.67 Crore to 553,122.66 Crore (+20.78%) during the year.

• Gross NPA ratio decreased from 1.25% to 0.73%.

• Net NPA ratio decreased from 0.36% to 0.18%.

• Provision Coverage Ratio (PCR) increased from 93.86% to 96.14%.

The total income had increased by 5554.74 Crore during the year from 56,141.75 Crore to 56,696.49 Crore during the year under review (+9.03%).

Interest income had increased from 55,291.26 Crore to 55,819.41 Crore. Other income had increased from 5850.49 Crore to 5877.08 Crore during the current year. Increase in total expenditure was at 5445.25 Crore. The total expenditure increased from 54,396.01 Crore to 54,841.26 Crore during the current year and the increase in total expenditure was 5445.25 Crore. Earnings per share increased from 574.68 to 584.47 and the book value of the share increased from 5568.90 to 5638.46.

2. Profit and Appropriation

The net profit stood at 51,337.55 Crore for the financial year ended March 31, 2026, after making all necessary provisions under various categories as per the prudential norms prescribed by the Reserve Bank of India. The appropriation out of the profit earned for the financial year 2025-26 are as under:

Transferred to:	Rs. in Crore
Profit and Loss account opening balance	260.29
Less: Final Dividend for 2024-25 @ 511/- per share	174.19
Less: Investment Fluctuation Reserve	9.40
Add: Net profit during the year 2025-26	1,337.55
Available for appropriation	1,414.25
Statutory Reserve	401.27
Special Reserve u/s 36(1)(viii) of IT Act, 1961	38.00
Capital Reserve	19.82
Transfer to General Reserve	600.00
Balance carried over to next year	355.16
Total	1,414.25

3. Dividend

The Board of Directors of the Bank have recommended payment of a Final Dividend at the rate of Rs. 12.50 (Rupees Twelve and Fifty paise only) per equity share of the face value of Rs. 10/- each (125%) for the year ended March 31, 2026. The dividend pay-out is in accordance with the Banks Dividend Distribution Policy (https://www.tmb.bank.in/pages/Regulatory-Policies). RBI guidelines and will be payable subject to approval of shareholders at the ensuing Annual General Meeting and deduction of tax at source, to the Shareholders whose names appear in the Register of Members as on the Cut-off date (i.e.) June 12, 2026.

4. Share Capital

The Banks issued and paid-up capital was 5158.35 Crore as on March 31, 2026.

5. Issue of Equity shares

During the year under review, there was no fresh issue of equity shares.

6. Earnings Per Share (EPS) and Book Value

The earnings per share stood at 584.47 (basic) and 584.47 (diluted) for the financial year ended March 31, 2026. This was 574.68 (Basic) and 574.68 (diluted) during the previous year. The book value per share has further improved to 5638.46 as on March 31, 2026, as against 5568.90 during the previous year.

7. Capital adequacy

The Capital to Risk Weighted Assets Ratio (CRAR) stood at 33.73% (as per Basel Ill) as on March 31, 2026, as against the minimum required level of 11.50% (including the Capital Conservation Buffer) stipulated by the Reserve Bank of India. The CRAR consisted predominantly of Common Equity Tier I (CET 1) which was 32.27% out of 33.73% of CRAR.

8. Deposits

The aggregate Deposits as on March 31, 2026, stood at 561,712.35 Crore, registering a growth of 14.94% over 553,688.96 Crore as on March 31, 2025. The interest rates for deposits were kept aligned with the prevailing trends in the Banking Industry.

Being a Banking Company, the disclosures required as per Rule 8(5)(v) of the Companies (Accounts) Rules, 2014, are not applicable to your Bank.

9. Advances

The Bank continued its lending activities in conformity with its Board approved Policies and Guidelines of the Reserve Bank of India. The Gross Advances of the Bank increased from 544,365.53 Crore as on March 31, 2025 to 553,378.92 Crore as on March 31, 2026 registering a growth of 20.32%. The increase in advances is mainly due to the growth recorded in Retail, Agricultural and MSME advances. The CD ratio of the Bank is at 86.50% as on March 31, 2026. For the previous Financial Year, it was at 82.63%.

The Bank continued its thrust on lending to Priority Sectors (PS) including Agriculture and Micro and Small Enterprises. The level of advances to Priority Sectors stood at 537,570.67 Crore as on March 31, 2026. The Total PS Advances (Net of PSLCs Sold) stood at 525,633.85 Crore constituting 79.80% of Adjusted Net Bank Credit (ANBC) as on March 31, 2025, as against the regulatory minimum requirement of 40%. The achievement of PS Advances, based on the Quarterly Average level of PS Advances / Quarterly Average ANBC stood at 84.77%.

Agricultural Advances reached ^20,056.79 Crore as on March 31, 2026. The Total Agricultural Advances (Net of PSLCs Sold) and including RIDF and other qualifying investments for Priority - Agriculture constitutes 25.28% of ANBC as on March 31, 2025, as against the regulatory minimum requirement of 18%. The achievement of Agriculture Advances, based on the Quarterly Average level of Agriculture Advances / Quarterly Average ANBC stood at 35.94%.

Total advances to Weaker Section stood at ^9,703.48 Crore as on March 31, 2026. The Total advances to Weaker Section (Net of PSLCs Sold) at ^6,803.48 Crore represents 21.18% of the ANBC as on March 31, 2025, as against the regulatory minimum requirement of 12.00%. The achievement of Advances to Weaker Section stood at 26.09% as on March 31, 2026.

The Bank achieved all the mandatory targets prescribed for the various sub-sectors like Loans to Small and Marginal Farmers (at 11.90% as on March 31, 2026, based on the ANBC as on March 31, 2025, as against the regulatory minimum requirement of 10.00%). The achievement of Advances to the Small and Marginal Farmers stood at 19.05%.

Advances to Micro Enterprises stood at 33.44% as on March 31, 2026, based on the ANBC as on March 31, 2025, as against the regulatory minimum requirement of 7.50%. The achievement of Advances to Micro Enterprises, based on the Quarterly Average level of Advances to Micro Enterprises / Quarterly Average ANBC is at 29.13%.

Under export credit, the Bank achieved a level of S669.28 Crore as on March 31, 2026, as against S597.76 Crore achieved as on March 31, 2025.

Due to the stress faced by the exporters, the Bank had sanctioned Loans to the extent of S86.12 Crore as at March 31, 2026, under the Credit Guarantee Scheme for Exporters introduced by the Government of India.

During the current year also, the Bank will strive further to increase the flow of credit to Agriculture, Retail and MSME Sectors apart from ensuring adequate and appropriate support to the Weaker Sections of the society.

The Bank had been actively participating in all the initiatives and schemes of the Government of India including Pradhan Mantri Mudra Yojana (PMMY), Pradhan Mantri Awas Yojana Urban 2.0 (PMAY 2.0), Entrepreneurship Development & Employment Generation Scheme (EDEGS), PM Street Vendors Atma Nirbhar Nidhi (PM SVANIDHl) etc. through all its eligible branches.

Sale of Priority Sector Lending Certificate (PSLCs)

The Bank has sold PSLCs worth ^11,960.00 Crore till March 31, 2026, which fetched an income of S135.66 Crore. Category-wise, the Bank had sold PSLC-Small & Marginal Farmers for ^2,900.00 Crore and PSLC-Agriculture for ^9,060.00 Crore till March 31, 2026.

Sale of Inter Bank Participation Certificate (IBPC)

The Bank has also sold IBPCs totalling to S1000 Crore till March 31, 2026, in Small & Marginal farmers portfolio. Financial Inclusion

Under the Financial Inclusion (FI) Programme, the Bank has covered 151 villages as on March 31, 2026. The total Basic Savings Bank Deposit Account (BSBDA) accounts of the Bank as on March 31, 2026, stood at 5.39 lakhs.

10. Investments and Treasury operations

During the Financial Year ended March 31, 2026, the Bank had achieved a turnover of ^24,847.74 Crore in trading operations, resulting in a net profit of S57.72 Crore, as against S26.54 Crore in the previous year.

The net investments of the Bank stood at g15,692.67 Crore as on March 31, 2026, as against g15,100.80 Crore as at the end of the previous year. The Investment-to-Deposit Ratio of the Bank was 25.43%, as against 28.13% at the end of the previous year.

The average realized yield on the investment portfolio for the year stood at 6.71% as against 6.77% in the previous year. The income earned during the year from investments, comprising of interest income and dividend income excluding income from RIDF was S1049.17 Crore as against S1017.42 Crore in the previous year.

The disclosures regarding particulars of loans, guarantee given and securities provided is exempt under the provisions of Section 186(11) of the Companies Act, 2013, since it is a Banking company.

11. Foreign Exchange Business

Foreign exchange business during the year under review as below: ( g in Crore)

Financial Year	Inflow	Outflow
2025-26	10,211.49	6,924.09
2024-25	11,269.96	8,071.76

The total merchant turnover of the Bank for the year 2025-26 was g17,135.58 Crore against g19,341.72 Crore during the previous year 2024-25. The profit on foreign exchange business for the year 2025-26 was S39.67 Crore against S38.91 Crore during the previous year 2024-25.

Your Bank has correspondent relationship with 319 overseas banks by exchange of Relationship Management Application (RMA) under SWIFT (Society for Worldwide Interbank Financial Telecommunication). It facilitates smooth and fast flow of communication in the international business. The SWIFT arrangement has enabled the Bank to give timely and efficient service to its NRI customer.

During the year under review, 57 branches were linked to Forex Processing Centre (FPC) and the total number of branches linked to FPC has increased to 582 from 525 branches. Your Bank has the necessary infrastructure to render fast and efficient service relating to inward remittance of foreign currency and for crediting the beneficiaries accounts on receipt of the foreign currency funds in Nostro accounts.

Your Bank has taken several initiatives to increase the Foreign Exchange Business significantly for improved customer service and for improving the fee based income in the coming years. Your Bank has provided online Electronic Trading Platform named as TMBFXBRIDGE for concluding exchange rates in 39 old B Category branches & FPC and direct view access to the Banks forex customers desirous of the same. FX-Retail platform has also been extended to customers on their request.

12. Branch network

During the year under review, your Bank had added 44 new branches and the branch network of the Bank has increased to 622 branches. In addition to that, the Bank has added 4 ATMs, 44 CRMs. The Banks ATM and alternate delivery channel network stood at 1152 ATMs, 424 CRMs, 121 e-lobbies, covering 17 States and 4 Union Territories.

13. Human Resources Development

As on March 31, 2026, the Banks total staff strength stood at 4,799 (including 11 contract employees) consisting of 2,466 Officers, 1,746 Customer Service Executives and 587 Supporting Staffs. During the year under review, 412 regular employees and 5 contract employees were recruited and 476 employees were promoted. Out of 4,799 employees, 3,948 employees are in Cost to Company (CTC) structure.

The Business per employee has increased from S20.67 Crore to S23.98 Crore in the FY 2025-26.

The Banks Staff Training College at Nagercoil and Chennai and Other Departments (like Credit, FPC, Operations, etc.,) had conducted 142 physical training programmes and 10 online training sessions on various banking subjects like Credit, Forex, Recovery, Information Security, etc. 2,931 staff members had undergone training programmes during the FY 2025-26.

In addition to the above, your Bank has tied up with reputed training institutions like SIBSTC-Bengaluru (Southern India Banks Staff Training College), Manipal Academy of BFSI-Bengaluru, NIBM-Pune, IIBF-Mumbai, IDRBT-Hyderabad, CAFRAL, etc. 1,045 staff members were trained in these leading institutions during FY 2025-26.

TMB eSMART, an online e-learning Management System was indigenously developed by the Bank to cater to the training needs of all staff members. It can be accessed 24x7x365 by the staff members in intranet and internet. Using TMB eSMART, the staff members can learn varied banking subjects like Credit, Forex, Information Security, KYC etc. To groom the staff members in different facets of Banking, we have 13 TMB Capacity Building examinations in various areas like KYC, Credit, Forex, Recovery etc.

We have also collaborated with One Hour Learning Mobile Application, as part of the ongoing commitment to foster continuous professional development. This initiative aims to provide employees with diverse learning opportunities to enhance their skills, acquire new competencies and confidently adapt to the evolving demands and challenges of the times.

Industrial relations in the Bank continued to be very cordial during the year with frequent interactions between the Management and the Officers and Employees Associations and various staff welfare activities were undertaken during the year. The Bank continues to lay emphasis on developing the individual skills of its employees and providing a healthy and cordial working environment so as to get maximum contribution from the employees of the Bank.

14. Inter branch adjustments

The Bank has continued to maintain a very good record in internal housekeeping. The core banking solution made it possible for the branches to balance all their accounts and tally balances up to March 31, 2026. Adequate importance was given to ensure timely submission and scrutiny of control returns.

15. Internal Control, Inspection and Audit

Risk Based Internal Audit system

The Bank has put in place an effective and strong Risk Based Internal Audit (RBIA) System. During the financial year 2025-26, RBIA was conducted in 504 branches (Totally 517 audits) of the Bank. Submission of compliance reports and closure of audits are followed up through the respective regional offices. RBIA was conducted for the following critical Departments: KYC and AML Cell, Risk Management Department, Credit Department, Information Technology Department, Integrated Back Office, Compliance Department, Treasury Department, International Banking Division.

The Bank has a proper and adequate internal control system. The Bank has standard operating procedures in monitoring the account operations to ensure effective internal controls.

Credit Audit

During the year under review, Credit Audit had been conducted for 950 borrowal accounts in 206 branches. Concurrent Audit system

The Bank continued to have the system of Concurrent Audit which covered 268 branches and important departments. Concurrent Audit has been recognized as an important tool of internal control and is in force at major branches including all B category branches designated to handle forex business.

Further concurrent audit is implemented in the following important departments - International Banking Division, Treasury, DPS Cell, ATM Cell, Integrated Back Office, Credit Management Centre, Customer Value Enhancing Department, Human Resource Development Department, Integrated Back Office, Forex Processing Centre, RTGS Cell, Transaction reconciliation at various divisions of ITD, Accounts Department, Expense approval of ITD, Establishment Department and all the four Currency Chests located at Chennai, Podanur, Madurai and Pudukottai (Thoothukudi).

Submission of compliance reports and closure of audits are followed up through the respective regional offices / departments.

Information System Audit

Information System audits were conducted at 517 branches (along with Risk Based Internal Audit), 9 Departments and 12 Regional offices.

Every year, critical Information systems deployed in our Bank like Core Banking System, E-Banking, Mobile banking, ATM, RTGS, Treasury, CTS clearing process, Server, SOC, HRMS and network infrastructure etc., are subject to Information System audit by an external auditor.

Management Audit system

To assess the robustness of the systems and procedures established in various operational units of the Bank and to have an oversight on the effectiveness of the management, various departments at Head Office and all Regional Offices are subject to Management Audit.

In addition to the above audit the Bank regularly conducts revenue audit in the branches to monitor the revenue leakages.

Vigilance

The functions of the vigilance machinery of the Bank are broadly divided into 3 types, viz. preventive, surveillance and punitive. The Vigilance Department had undertaken a study of the existing procedures and practices prevailing in the organization with a view to modify those procedures or practices that provide scope for malpractice/fraud perpetrated by the staff members and also finding out the causes of delay in reporting and the points at which the delays occur and devising suitable steps to minimize delays at different stages. To educate the employees of the Bank, the Vigilance Department had brought out various fraud awareness circulars and conducted training programmes periodically.

Vigil Mechanism

The Bank has implemented the Whistle-Blower cum Protected Disclosure Policy, intended to promote the participation of employees at all levels to aid in detection of corruption, misuse of office, criminal offences, suspected/ actual fraud, failure to comply with the rules and regulations prescribed by the Bank and any events/acts detrimental to the interest of the Bank, depositors and the public resulting in financial loss/ operational risk, loss of reputation etc. Further, the mechanism adopted by the Bank encourages the Whistle Blower to report genuine concerns or grievances. It provides adequate safeguards against Whistle Blowers victimization for those who avail such mechanism and offers direct access to the Chief of Internal Vigilance (CIV). Further, there was no occasion where a person was denied access to the Audit Committee of the Board. The details of the Whistle-Blower cum Protected Disclosure Policy are posted on the Banks website and available at the link: https://www.tmb.bank.in/pages/policies.

16. Customer Service

Customer service is an important part of maintaining on going customer relationship, which is a key for continuous business growth and to retain the customer. The Bank is well known for its good, courteous and effective service to customers and is constantly re-designing its product and services to meet the expectations of the modern-day tech-savvy customers, by introducing new and innovative products for seamless digital experience.

The Internal Ombudsman examines customer complaints which are in the nature of deficiency in service on the part of the Bank, that are partly or wholly rejected by the Bank. The Bank shall internally escalate all complaints, which are not fully redressed to the Internal Ombudsman, before conveying the final decision to the complainant.

17. Technology Absorption

Your Bank is initiating various steps to provide technology-enabled products and services to customers by adopting latest and contemporary technology. Banking Services are extended to customers through Branches and ATMs by using multiple network technologies such as MPLS, Leased Line and GSM with redundant connectivity. As an alternative to traditional Branches / ATMs, the digital services are seamlessly offered to customers without any disruption through various delivery channels viz. Internet Banking, Mobile Banking, IMPS, UPI, AEPS, Point of Sale terminals, Cash Deposit Kiosk, Passbook Printing Kiosk, WhatsApp Banking etc.,

The availability of the services of all the alternate delivery channels to customers is ensured by way of active monitoring and attending to outages if any, instantly.

The Bank has 1,576 ATMs and CRMs as on March 31, 2026.

Core Banking

Your Bank has implemented “Finacle“, Core Banking Solution and has implemented the current version of the software at all its branches.

Internet Banking

Your Bank had introduced "Internet Banking facility" to customers during November 2008 and during the year upgraded the Internet Banking Software to the Digital Experience Hub (DEH). The Bank has also introduced Corporate Net banking facility for customers with maker / checker facility to bring in more security to the transaction initiated by corporate customers. We have also tied up with multiple Payment Gateway service providers for extending utility bill payment services to the customers.

Facilities provided to customers through Internet Banking include Real-time Account Synchronisation, Self on-boarding for Retail Customers, RTGS, NEFT, IMPS, Opening of Deposit Accounts, e-Commerce transactions, online tax payment, online bills & Utility Services Payment, scheduled payments, Payments to TMB Credit Card dues and Prepaid Card Top-up etc. Currently the e-Banking facility has been extended to all customers.

Mobile Banking as Super App

Mobile Banking facility has been provided in both Android and iOS. Customers can self-onboard in Mobile Banking and also through branches. By using mobile banking facility, customer can perform SB/CA/loan/ deposit inquiry, transfer of funds (Within TMB/NEFT/IMPS/RTGS), Deposit Opening, Bill payments (like TNEB payment, Mobile Recharge, etc), Cheque Book Issuance, ATM Card Blocking, Cheque Status Inquiry, etc., In addition, certain features like Transaction limit setting, Credit Card details and Payment Dues, Debit Card Blocking, Beneficiary Management, Beneficiary Name Lookup, Voice Authentication, Loan against Deposits, Overdraft against Deposits and Form 121 / 41 declaration are available for the Mobile Banking Customers. We are continuously adding new features in the Mobile Banking application. The Bank is continuously adding new products and features in its Mobile Banking Application.

UPI

Unified Payment Interface (Acquirer and Issuer) service is available as an additional feature in the TMB MBank Application to our customers. Customers using TMB MBank app can Send Money, Receive Money, Approve Payments, Scan, Pay QR and more, by linking the TMB Bank account or other Bank accounts in TMB MBank app, similar to various NPCI Certified Third Party UPI applications like BHIM.

UPI Lite facility with auto top-up is also available where customers can carry out UPI Payments up to S1000 without entering UPI PIN. Your Bank is now live in UPI International Payments, UPI numeric, Credit Card on UPI, UPI Circle (Delegate Payments), IPO Mandates, One Time Mandates, Recurring Mandates and Credit Line on UPI as issuer.

Your Bank is issuing UPI Merchant QR to customers at its branches to accept merchant payments.

Bank has initiated various steps to increase its digital footprint and promote ease of carrying out transactions with utmost security.

Server Infrastructure

Banks Server infrastructure is maintained at its Primary Data Centre (DC) and Disaster Recovery (dr) Centre apart from a Near Disaster Recovery (NDR) site. The Bank has deployed Physical, Virtual, Hyper Converged Infrastructure and dedicated Storage devices at DC and DR Centres.

Hyper Converged infrastructure installed at the DC and DR locations, which is a three-node cluster arrangement, provides high availability, high scalability, cost effectiveness, improved workload performance and occupies less space.

Storage Infrastructure was upgraded from SAS to Flash storage to get high performance in Core Banking Solution (Finacle). It is scalable for future needs and ensures high availability.

Health of Server Infrastructure is monitored in a real time mode through monitoring tools for Server related parameters such as CPU Utilization, CPU Load, Memory Usage, Process, Threads, Disk Space Usage, Network Traffic, Uptime, Regex (Regular Expression) based alerts etc.

PAM (Privileged Access Management) solution was implemented to provide access to the servers in a more secure way with Multi Factor Authentication. Our DR site is operational 24 hours everyday and the systems are kept upto date with the DC site on a continuos basis, to ensure that the Disaster Recovery Operations remain accurate, relevant and operable during aadverse conditions. We confirm this readiness by carrying out planned and un-planned DR Drills on a regular basis.

Security Infrastructure

Your Bank has implemented contemporary Security Infrastructure through Security Operations Centre (SOC) to automate and respond to threat detection so as to protect the data, systems and network from external threats and system vulnerabilities.

18. Product Innovation, New Products and Services

The Bank remains committed to expanding its service portfolio through strategic product development and digital integration. Major initiatives launched during the financial year 2025-26 include:

Enhanced Savings Solutions

• Introduction of JLPlus Savings Bank Account (designed as combo of Jewel Loan and Savings Bank Account)

Designed specifically for targeting the segment of customers who own gold jewellery and need short term credit simultaneously aspiring to grow their savings in the form of gold and liquid cash.

• Introduction of DepPlus Savings Bank Account

Designed as combo of Term deposit and savings bank account

• Introduction of Capital Gains Savings Account

Scheme launched as per Capital Gains scheme,1988 under the Indian Income Tax Act, 1961. The scheme enables customers to temporarily park long term capital gains arising from the sale of certain assets, when they intend to reinvest in eligible assets such as residential property.

Strategic Current Account Re-alignment

• Revamping Current Account Products - Ordinary Current Account and Super Flexi Current Account

• Introduction of New Current Account Scheme - TMB Collection Account

• Introduction of New Current Account Scheme - TMB Super Value Current Account (TSVCA)

Specialized Groups & Operational Excellence

• Formation of New Vertical: Elite Service Group (ESG) - A dedicated team for premium customers to provide priority banking support, personalized relationship management, special assistance for HNI/VIP customers etc

• Launch of Customer Experience (CX) - Launched with an aim to improve faster and hassle-free customer service, personalized customer support, service requests, better communication, transparency etc

• Launch of Vendor Management System (VMS) - Launched with an aim to streamline the expenses, vendor payments, monitoring and centralized management in a transparent and controlled manner.

19. Awards / Ratings

The Bank has been honoured with several prestigious awards during the year under review, recognizing excellence in risk management, digital transformation and social security implementation.

Banking Performance & Risk Management

• Winner - Best Performance on Risk Management (Private Sector Bank - Small), awarded by Indian Chamber of Commerce (ICC).

• Joint Winner - Best Performance on Asset Quality in the Private Sector Bank (Small) category by the Indian Chamber of Commerce (ICC).

• Winner - Best Private Sector Bank (Other Category), National Level - SFBCK Banking Excellence Awards 2025.

Digital & Technological Innovation

• Winner - Enterprise-wide Digital Transformation Excellence Award - Oracle (AI Fusion Category)

• Winner - Gold in the Cyber Shield Innovation category at the IBEX India 2026 BFSI Tech Awards

• Winner - Silver in the Digital CX Trailblazer at the IBEX India 2026 BFSI Tech Awards.

Accolades received for Implementing Atal Pension Yojana (APY)

• First Place under Private Banks - APY Trendsetter of the Year

• Overall 2^nd Place - APY Annual Award of Ultimate Achiever

• Second place under Private Banks

1) APY Premier League

2) APL Runners up CUP

• APY Retirement Revolutionaries - Visionary Revolutionary & 4 Awards of Excellence

• Exemplary Leadership Award (First Place under Private Banks) - APY Leadership Pinnacle for MD & CEO

• Second Place under Private Banks

1) APY Ultimate Champions Cup Exemplary Champion Cup & Silver Cup

• Award of Par Excellence - APY Circle of Excellence

• Award of Par Excellence - APY Big Believers

• Award of Exemplary Achiever (Highest among each category, Overall First place) - Amazing Achievers of APY

External Rating:

During the financial year 2025-26, CRISIL renewed the rating for the Certificate of Deposit programme of the Bank as follows:

Instrument category	Ratings	Instrument
Long Term	CRISIL A+	^15,000 crore Fixed Deposits
Short Term	CRISIL A1 +	^25,000 crore short term Fixed Deposits
		S1,000 crore Certificate of Deposits

20. Risk Management

Your Bank has a proactive approach towards Risk Management. Its risk philosophy involves developing and maintaining its banking activities within its risk appetite and regulatory framework.

The Risk Management Architecture of the Bank comprises of an Independent Risk Management Organizational structure at the corporate level, Risk Management Policies, Risk Measurement Tools and Risk Monitoring and Management Systems. The Bank has a well-defined risk appetite statement and all the banking functions are dovetailed to the risk appetite statement.

The Board of Directors of the Bank is primarily responsible for laying down risk parameters and establishing an integrated risk management and control mechanism. The Board of Directors is supported by a Sub- Committee of the Board known as the Risk Management Committee of the Board (RMCB), which in turn is aided by the Asset Liability Committee (ALCO), Credit Risk Management Committee of Executives (CRMCE) and Operational Risk Management Committee of Executives (ORMCE). The executive level Committees are headed by the MD & CEO of the Bank. The Banks RMCB reviews its Risk Management policies and recommends to the Board for approval. The Board also sets out limits, taking into account the risk appetite of the Bank and the goals set.

The Banks liquidity ratios, i.e., LCR & NSFR are also above the minimum stipulated level indicating comfortable position with regard to liquidity risk.

Your Bank has been proactively conducting internal assessment of adequacy of capital, liquidity ratios and leverage ratios in accordance with Basel-III standards. The Banks capital position is in compliance with Basel-III expectations and well above the minimum requirements.

21. Board of Directors

The Banks Board as on March 31, 2026, comprises of 14 Directors and the composition of Board are given below:

S. No	Name	Sector Represented / Area of specialized knowledge
1	Thiru K.Ramachandran	Majority Sector - Banking and Information Technology
2	Thiru Salee S Nair	Majority Sector - Banking
3	Thiru Vincent M.D.	Majority Sector - Banking
4	Thiru A.Niranjan Sankar	Minority Sector - Business Management and Human Resource
5	Thiru K.V.Rama Moorthy	Majority Sector - Agriculture & Rural Economy and Banking
6	Thiru S.R.Aravind Kumar	Minority Sector - SSI (MSME) and Information Technology
7	Thiru R.Kodeeswaran	Minority Sector - Business Management
8	Thiru C.Chiranjeeviraj	Majority Sector - Accountancy and Finance
9	Thiru S.Sridharan	Majority Sector - Banking, Economics and Law
10	Thiru R.Deepak Shankar	Minority Sector - SSI (MSME)
11	Tmt R.Kanagavalli	Majority Sector - Law
12	Thiru A.Shidambaranathan	Majority Sector - Accountancy, Banking and Finance
13	Thiru C.S.Ram Kumar	Additional Director, RBI
14	Thiru V.Srinivasan	Additional Director, RBI

All Directors, other than the Managing Director & CEO and the Executive Director, are Non-Executive Directors on the Board.

During the current year,

1. Thiru A. Shidambaranathan (DIN: 02904738) was appointed as an Additional Director in the capacity of Non-Executive Independent Director for a period of three years at the Board Meeting held on March 26, 2025. The Shareholders of the Bank had approved his appointment on June 04, 2025, through Postal Ballot.

2. Thiru B. Prabaharan (DIN: 00209875), Non-Executive Independent Director had resigned from the Board of the Bank on June 09, 2025, with effect from the close of the business hours on June 11, 2025, due to his pre-occupations and other personal commitments.

3. Your Board of Directors at their meeting held on June 12, 2025, on the basis of the recommendation of the Nomination and Remuneration Committee, had approved the appointment of Thiru K. Ramachandran (DIN: 08589628) as an Additional Director on the Board of the Bank, for a period of three consecutive years, with effect from June 12, 2025 to June 11, 2028, in the capacity of Non-Executive Independent Director, he shall not be liable to retire by rotation. The Board has further recommended the appointment of Thiru K. Ramachandran (DIN: 08589628) as Non-Executive Part-Time Chairman of the Bank, from the date of approval granted by RBI till the date of his tenure as Independent Director, with a remuneration of g18 lakh p.a.

The Reserve Bank of India, vide its order Ref.No.CO.DOR.HGG.No.S3873/08.55.001/2025-26 dated August 14, 2025 had approved the appointment of Thiru K. Ramachandran (DIN: 08589628) as Part-Time Chairman of the Bank w.e.f. the date of approval, i.e., from August 14, 2025 to June 11, 2028, at a fixed remuneration of g18 lakh p.a. The Shareholders of the Bank had approved his appointment on October 30, 2025, through Postal Ballot.

4. Thiru S.R.Ashok (DIN: 07933713) and Thiru D.N.Nirranjan Kani (DIN:00455352), Non-Executive Directors of the Bank demitted their office at the close of business hours on October 27, 2025, consequent to completion of their eight (8) years tenure in terms of Section 10A(2A)(i) of the Banking Regulation Act, 1949.

5. Your Board of Directors at their meeting held on November 19, 2025, on the basis of the recommendation of the Nomination and Remuneration Committee, had approved the appointment of Thiru S.R.Aravind Kumar (DIN: 02145836) and Thiru R. Kodeeswaran (DIN: 00466141) as Additional Directors of the Bank under “Non-Executive Director” category for a period of three consecutive years, with effect from November 19, 2025. In terms of Section 149(13) of the Companies Act, 2013, Thiru S.R.Aravind Kumar and Thiru R.Kodeeswaran shall be liable to retire by rotation. The Shareholders of the Bank had approved their appointments on December 28, 2025, through Postal Ballot.

6. The Reserve Bank of India, vide its order Ref.No.CO.DOR.HGG.No.S7192/08.55.001/2025-26 dated December 19, 2025, had appointed Thiru V.Srinivasan (DIN: 11444537), General Manager, Reserve Bank of India, as Additional Director of the Bank for a period of two years from December 20, 2025 to December 19, 2027, or till further orders, whichever is earlier in place of Thiru Thomas Mathew, Principal Chief General Manager (retired), Reserve Bank of India.

The other related details of Directors and Key Managerial Personnel are available in the Corporate Governance report, which forms part of this report.

22. Employee Stock Option Plan

The Board of Directors of the Bank in their meeting held on January 17, 2025, had approved the Tamilnad Mercantile Bank Limited (TMB) Employee Stock Option Plan 2024 (“TMB ESOP 2024”) and the same was approved by the shareholders of the Bank on March 12, 2025, through Postal Ballot. The Bank had filed an application with the Stock Exchanges for obtaining in-principle approval from them for issuing new shares under TMB ESOP 2024.

The BSE Limited and the National Stock Exchange of India Limited (NSE) has issued In-principle approval letter dated July 24, 2025, for the listing of up to a maximum number of 15,83,514 Equity Shares of g 10/- each to be allotted to the employees of the Bank (Company) under “TMB ESOP 2024”.

The Bank has designated the Nomination and Remuneration Committee (NRC) of the Board as the Compensation Committee (“CC”) and the CC in their meeting held on October 27, 2025, had approved the following grant to the MD&CEO and the Executive Director:

S.No.	Name of the Grantee	No. of the Shares to be allotted	Financial Year/ deferment
1	Thiru. Salee S Nair (md&ceo)	4509	2024-25 - to be allotted in the ratio of 30:30:40 over a period of three years
2	Thiru. Vincent M.D. (Executive Director)	3370	2024-25 - to be allotted in the ratio of 30:30:40 over a period of three years

Pursuant to Regulation 13 of the Securities Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, a certificate from the Secretarial Auditor is attached as Annexure 9.

The ESOP Scheme Document is posted on the Banks website and available at the link: https://tmb.bank.in/ doc/8c2b7108-e74c-4a1c-8189-6aafdebc3be7.pdf

23. Declaration by Independent Directors

Your Bank has received necessary declarations from all the Independent Directors under Section 149(7) read with Section 149(6) of the Companies Act, 2013 and Regulation 25(8) read with Regulation 16(1)(b) of the SEBI LODR Regulations, 2015, that they meet the criteria of independence laid down thereunder.

24. Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI (LODR) Regulations, 2015, the Bank had appointed Tmt. R.Kanagavalli (DIN: 00883998) on August 19, 2024, as Woman (Non-Executive Independent) Director on the Board of the Bank.

25. Details of Subsidiaries and Associates

Your Bank does not have any Subsidiaries or Associates or Joint Ventures for the Financial Year ended March 31, 2026.

26. Change in the nature of Business

During the Financial Year ended March 31, 2026, there is no change in the nature of business of the Bank.

27. Directors Responsibility Statement

Pursuant to Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:

(a) In the preparation of the annual accounts for the Financial Year ended March 31, 2026, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) The Board of Directors have selected the accounting policies and applied them consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the Financial Year 2025-26 and of the profit of the Bank for that period.

(c) The Board of Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

(d) The Board of Directors have prepared the annual accounts for the Financial Year ended on March 31, 2026, on a going concern basis;

(e) The Board of Directors have laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

(f) The Board of Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

28. Details of contracts or arrangements with related parties

Related Party Transactions that were entered, during the financial year under review, were on an arms length basis and were in the ordinary course of business, pursuant to the approval of the Audit Committee of the Board. There were no materially significant related party transactions during the financial year, which could lead to potential conflicts with the interests of the Bank.

During the year, two gold overdraft facilities amounting to S0.14 crore each, were extended to the relatives of a Director of the Bank for their business and personal requirements. The Audit Committee of the Board in its subsequent meeting, reviewed and approved these related party transactions in accordance with the applicable framework. As on the date of this report, the said facilities have been fully repaid and closed.

Further, the Audit Committee of the Board reviewed and approved an interest rate concession in relation to a deposit overdraft of S0.67 crore availed by the entity in which a Director of the Bank is interested, on the security of third-party deposits.

There were no Related Party Transactions required to be reported in Form AOC-2. Your Bank has a Policy on Related Party Transactions which was reviewed by the Board on the recommendation of the Audit Committee of the Board, with certain amendments including amendments to align with the regulatory changes in SEBI LODR. The Policy is available on your Banks website: https://www.tmb.bank.in/pages/Regulatory-Policies.

29. Board Level Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015, the Nomination and Remuneration Committee of the Board had laid down the criteria for Performance Evaluation of the Board as a whole, Individual Directors including the Chairman, Independent Directors and Non-Independent Directors as well as the process for such evaluation.

The Bank has aligned its Board Evaluation Framework in line with the Guidance Note on Board Evaluation issued by the SEBI as per Circular dated January 5, 2017. The Board of Directors has carried out the annual evaluation of the performance of the Board as a whole, Individual Directors including the Chairman, Independent Directors and Non-Independent Directors.

The performance of the Board as a whole, Individual Directors including the Chairman, Independent Directors and Non-Independent Directors have been evaluated / reviewed by the Nomination and Remuneration Committee, by the Independent Directors and by the Board of Directors.

The Board has formulated a Policy on Performance Evaluation which includes the aspects such as

• Acting in the best interest of the Bank

• Exercise of due and reasonable care, skill, diligence and independent judgement

• Avoidance of direct or indirect conflicts of interest

• Avoidance of undue gain or advantage either to self or relatives, partners or associates

• Maintaining confidentiality of information, including commercial secrets and unpublished market - sensitive information

• To oversee the Banks financial reporting process and ensuring correct, adequate and credible disclosure of financial information.

• To review with the management, the financial statements with special emphasis on accounting policies and practices, compliance with accounting standards and other legal requirements, concerning financial statements

• To review the adequacy, quality and effectiveness of external and internal audit, internal control system, interaction with external auditors before finalization of Annual accounts and reports.

• To review Banks finance and risk management policies.

• Striving to attend all committee Meetings

• Display of requisite knowledge and expected level of awareness of the Bank and external environment in meetings and comments

• Seeking appropriate clarification or amplification of information where necessary

• Contribution in terms of constructive ideas, guidance and knowledge of better decision making and management of Banks affairs.

30. Banks policy on Directors appointment and remuneration

The Bank has a Board approved Nomination and Remuneration Policy for appointment of Directors and Senior Executives of the Bank.

The Bank also has a Board approved compensation policy which deals with the compensation & benefits of the Managing Director & CEO, the Executive Director and all Senior Executives of the Bank.

The remuneration of the MD & CEO and the Executive Director is recommended by the Nomination and Remuneration Committee (NRC) to the Board for approval after considering the factors prescribed under the Compensation Policy. The Board considers the recommendations of NRC and approves the remuneration, modifications, subject to shareholders and regulatory approvals.

The other Non-Executive Directors are paid only sitting fees for attending the meetings of the Board and its Committees. None of the directors including the MD & CEO and the Executive Director receives any profit linked remuneration. The sitting fees payable to the Non-Executive Directors is ^50,000/- for Board Meeting and ^25,000/- for Committee Meetings for the year under review.

The terms and conditions of appointment of Independent Director are available on the Banks website - https://www.tmb.bank.in/doc/2point.pdf

31. A statement regarding opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the Independent Directors appointed during the year

The details are available in the Corporate Governance Report.

32. Board / Committee meetings

During the year under review, total 14 meetings of the Board and 71 meetings of the Committees of the Board were held. For details of the meetings of the Board and its Committees, please refer to the Corporate Governance report forming part of this report.

33. Annual General Meetings

For the details of the Annual General Meetings, please refer to the Corporate Governance report forming part of this report.

34. Compliance Function

The Bank has embedded a strong compliance culture and robust mechanisms throughout the organization to advance its strategic goals of transparency and trust among all stakeholders. The Bank has implemented a robust compliance system, anchored by a comprehensive, Board-approved Compliance Policy that clearly outlines its compliance philosophy. Pursuant to Reserve Bank of India guidelines, the Bank has established an independent Compliance Function, led by the Executive Vice President serving as Chief Compliance Officer (CCO). The Banks Compliance department ensures that the overall business adheres strictly to regulator-mandated guidelines and statutory provisions. It also guides business units and stakeholders on regulatory requirements, emphasizing a deeper understanding of the intent and spirit. The key functions of the department include tracking and disseminating regulatory updates to functional units, monitoring timely implementation of regulatory instructions, reviewing processes from a regulatory compliance perspective, providing guidance on compliance-related matters among others. The Compliance Department serves as the nodal office for regular communication between the Bank and RBI, while also managing activities related to RBIs Risk Based Supervision process. To further strengthen compliance across the Bank, dedicated Compliance Officers are posted in each department, regional office and branch. The Bank continues its sustained efforts to enhance its compliance culture by raising employee awareness.

35. Compliance with the provisions of the Companies Act, 2013

The Bank had complied with all the provisions of the Companies Act, 2013 and the rules made thereunder, to the extent that are applicable to the Bank. However, the Bank had filed two suo moto applications before the Registrar of Companies, Chennai (ROC) under Section 454 of the Companies Act, 2013 on February 07, 2025. During the year under review, pursuant to the proceeding before the Registrar of Companies, vide its order dated September 18, 2025, imposed a penalty of ^25,000 each on the Bank and the same was duly paid.

36. Internal Auditors

The Board is of the opinion that, the Bank is already governed by The Banking Regulation Act, 1949 and is under the purview of RBI Concurrent Audit framework, which involves continuous monitoring and regular compliance verification and the Inspection Department of the Bank conducts audit of the branches & various departments as per the Board approved policy and as per the RBI guidelines. The reports of the Concurrent Audit are placed before the Audit Committee of the Board.

Considering the extensive coverage of such audit, the Board is of the view that a separate Internal Auditor appointment may not be required under the Companies Act, 2013.

37. Statutory Auditors

Pursuant to provisions of Section 139 of the Companies Act, 2013 read with Section 30(1A) of the Banking Regulation Act, 1949, the Board of Directors had recommended the appointment of M/s.Sundaram & Srinivasan, Chartered Accountants, Chennai (Firm Registration No. 004207S) and M/s. Chandran & Raman, Chartered Accountants, Chennai (Firm Registration No. 000571S) as the Joint Statutory Central Auditors of the Bank for the Financial Year 2026-27. The Reserve Bank of India vide its letter dated May 07, 2026, had approved the same. It is subject to the approval of the members at the ensuing Annual General Meeting.

The proposed Auditors have confirmed their eligibility to be so appointed in terms of Section 141 of the Companies Act, 2013.

38. Comments on Auditors Report

The Notes on Accounts and the Significant Accounting Policies referred to in the Auditors Report and forming part of the annual accounts and the references made by the Auditors in their Report are self-explanatory. The Auditors have not made any observations or adverse comments warranting any explanation on the part of the Board as referred to in Section 134 (3) (f) of the Companies Act, 2013.

39. Details in respect of frauds reported by Auditors

During the year under review, the Auditors have not reported any instance of fraud committed in the Bank by its officers or employees to the Audit Committee of the Board under section 143 (12) of the Companies

Act, 2013.

40. Secretarial Audit

The Bank had appointed M/s. SPNP & Associates, Practicing Company Secretaries, Chennai, as the Secretarial Auditor to conduct the Secretarial Audit of the Bank for five consecutive financial years from the FY 2025-26 to 2029-30 and the appointment was approved by the shareholders of the Bank in the 103^rd Annual General Meeting of the Bank, held on August 08, 2025. The report of the Secretarial Auditor for the financial year 2025-26 is enclosed as Annexure 1.

The Secretarial Auditor has made the following observations and your directors would like to submit the response to the observations as below;

• During the Financial Year under review, the bank had paid a penalty of S39.60 Lakhs for non-compliance of Payments and Settlements Act, 2007 (PSS Act).

The comment made by the Secretarial Auditor is self-explanatory in nature and your Bank has taken necessary steps to ensure compliance with regulatory guidelines as amended from time to time.

• During the Financial Year under review, the Adjudicating Authority under Ministry of Corporate Affairs had levied a penalty of ^50,000 on the suo moto applications filed by the Bank for the non-compliances under Section 118(1) of the Companies Act, 2013 and the Secretarial Standards.

The comment made by the Secretarial Auditor is self-explanatory in nature and your Bank has taken necessary steps to ensure compliance with regulatory guidelines as amended from time to time.

• During the Financial Year under review, the bank had transferred S5.00 Crores to TMB Foundation on May 19, 2025, which was ratified at the Board Meeting held on June 12, 2025.

The amount was transferred to the TMB Foundation (Implementing Agency) due to business exigencies and the action of the Managing Director and CEO of the Bank was ratified by the Board in its subsequent meeting. Further, the comment made by the Secretarial Auditor is self-explanatory in nature and your Bank has taken necessary steps to ensure compliance with regulatory guidelines as amended from time to time.

• During the period under review, the Bank had not submitted the Secretarial Compliance Report in the prescribed filing procedure on the Stock Exchange. Therefore, it has been treated as a case of non-submission under Regulation 24A of SEBI (LODR) Regulations, 2015. Accordingly, the Bank paid a penalty of ^52,000/- as per the notice received from BSE.

The comment made by the Secretarial Auditor is self-explanatory in nature and your Bank has taken necessary steps to ensure compliance with regulatory guidelines as amended from time to time.

• The Bank had received email communications from NSE on February 03, 2025 & February 18, 2025 and from BSE on February 25, 2025, regarding non-compliance of constitution of the Nomination & Remuneration Committee of the Board, in terms of Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, for the period from October 09, 2024 to October 27, 2024. Subsequently, BSE levied a penalty of ^38,000/- for the aforesaid non-compliance, which was paid by the Bank.

The comment made by the Secretarial Auditor is self-explanatory in nature and your Bank has taken necessary steps to ensure compliance with regulatory guidelines as amended from time to time.

41. Annual Secretarial Compliance Report

The Bank had undertaken an audit for the Financial Year ended March 31, 2026, for all applicable compliances as per the SEBI (LODR) Regulations, 2015 and Circulars / Guidelines issued thereunder. The Annual Secretarial Compliance Report duly signed by M/s. SPNP & Associates, Practicing Company Secretaries, Chennai, has been submitted to the Stock Exchanges and is enclosed as Annexure 2 to this Directors Report.

42. Compliance to Secretarial Standards

The Bank has complied with the provisions of the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and has put in place systems which are adequate and are operating effectively.

43. Funding sources of renewable energy (Conservation of Energy)

The Bank has been supporting and financing various activities for development of alternative energy generation and transition. The Bank recognizes wind and solar energy as main sources of best renewable and pollution free energy throughout the year and considers funding these initiatives as its contribution towards the worldwide effort against global warming. Accordingly, Bank encourages setting up of solar panels by financing solar energy generation plants. The Bank has also taken various steps to conserve energy in its own premises, by establishing solar panels in 18 branches.

44. Corporate Social Responsibility

The Bank has constituted a Corporate Social Responsibility (CSR) Committee and has also adopted a CSR Policy. The CSR Policy is available on the Banks website. The disclosure in respect of the CSR activities of the Bank as required to be made as per the Companies (Corporate Social Responsibility) Rules, 2014 is given in Annexure 3.

Total CSR obligation for your Bank for FY 2025-26 was S29.07 Crore. Out of the total S29.07 Crore, S8.76 Crore was spent towards various CSR activities during the FY 2025-26 whereas S20.31 Crore was transferred to our Implementing Agency "TMB Foundation" for carrying out ongoing and multi-year projects. These ongoing and multi-year projects are being implemented through our Implementing Agency in alignment with the activities outlined under Schedule VII of the Companies Act, 2013.

45. Annual Return

Annual Return Pursuant to provision of Section 134(3)(a) and Section 92(3) of the Companies Act, 2013, the Annual Return as at March 31, 2026, is available in the Banks website. The same can be accessed at https://www.tmb.bank.in/pages/Annual-Return.

46. Disclosures Pertaining to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Maternity Benefit Act, 1961

The Bank has zero tolerance towards any act on the part of any executive / employee which may fall under the ambit of Sexual Harassment at workplace and is fully committed to uphold and maintain the dignity of every woman working in the Bank. The Policy provides for prevention and protection against sexual harassment of women at workplace and for redressal of such complaints. All the employees (permanent, contractual, temporary or trainee) are covered under this policy.

Number of complaints pending as at the beginning of the Financial Year - Nil

Number of complaints filed during the Financial Year - 1 (The same has been disposed)

Number of complaints pending as at the end of the Financial Year - Nil

The Bank is in compliance with the Maternity Benefit Act, 1961, as amended from time to time.

47. Transfer of Equity Shares / Unclaimed Dividends to Investor Education and Protection Fund (IEPF) Authority.

The details of the Equity Shares / Unclaimed Dividends transferred to the Investor Education and Protection Fund (IEPF) Authority are available in the Corporate Governance report forming part of this report.

48. Strictures and Penalties

During the year under review, the Statutory bodies / Regulatory authorities have imposed the following penalties on the Bank:

1. RBI had imposed penalty of ^3,90,000/- under the scheme of penalty for Non-replenishment of ATM.

2. RBI had imposed penalty of ^12,250/- on April 30, 2025, for the reason of irregularities found during their visit at our Thoothukudi, Pudukottai Currency Chest and Officials of Currency Chest have not been provided training on CyM-CC portal operations

3. RBI had imposed a monetary penalty of S10 lakh (Rupees Ten lakh only) on November 13, 2025, for indirectly imposing charges on persons making payment by using UPI and S29.60 lakh (Rupees Twenty Nine Lakh Sixty Thousand only) for failure to credit to the DEA Fund an amount of ^4,06,98,298 standing to the credit of 12,243 accounts within the prescribed time period under section 264 of the BR Act.

4. The Bank had submitted waiver applications to the Stock Exchanges namely BSE Limited and National Stock Exchange Limited in relation to certain instances of non-compliance of certain provisions of SEBI (LODR) Regulations, 2015. Pursuant to the decision taken by the Stock Exchanges on the applications, a sum of ^38,000/- was paid as penalty to BSE Limited and similar communication from NSE Limited is awaited.

Further, BSE Limited levied a penalty of ^52,000/- for non-compliance with Regulation 24A of SEBI (LODR) Regulations, 2015 and the penalty was paid to BSE Limited.

5. The Bank had filed two suo moto applications before the Registrar of Companies, Chennai (ROC) under Section 454 of the Companies Act, 2013. Pursuant to the proceeding before the Registrar of Companies, vide its order dated September 18, 2025, imposed a penalty of ^25,000 each on the Bank and the same was duly paid.

6. NSDL had imposed penalty for Rs.1,500/- on December 09, 2025, towards deficiencies in DPM system.

49. Requirement for maintenance of cost records

The cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013, are not required to be maintained by the Bank.

50. Management Discussion & Analysis

The Management Discussion & Analysis as required under the SEBI (LODR) Regulations, 2015, is enclosed as Annexure 4, forming part of this Report.

51. Particulars of Employees and Remuneration

The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure 5 which forms part of this report.

52. Corporate Governance

Your Bank is committed to follow the best practice of corporate governance to protect the interest of all the stakeholders of the Bank, viz. shareholders, depositors and other customers, employees and the society in general and maintain transparency at all levels.

As required under Regulation 34(3) read with Schedule v(c) of the SEBI (LODR) Regulations, 2015, a report on Corporate Governance and the certificate as required under Schedule v(e) of the SEBI (LODR) Regulations, 2015, obtained from M/s. SPNP & Associates, Practicing Company Secretaries, Chennai, regarding compliance of conditions of Corporate Governance are enclosed as Annexure 6 & Annexure 7 respectively, forming part of this report.

53. Business Responsibility and Sustainability Report

The Business Responsibility and Sustainability Report (BRSR) of your Bank for the Financial Year ended March 31, 2026, is enclosed as Annexure 8 as required under Regulation 34(2)(f) of the SEBI (LODR) Regulations, 2015. Your Bank continues to execute strong ESG proposition by working with all relevant stakeholders as well as in its own operations.

54. Material changes and commitment, if any, affecting the financial position of the Bank from the end of the financial year and till the date of this report

There are no material changes and commitments affecting the financial position of the Bank.

55. The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Bank operations in future

During the Financial Year ended March 31, 2026, no significant and material orders were passed by the Regulators or Courts or Tribunals against the Bank which impacts its going concern status and Banks operations in future.

56. The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof

Being Banking Company, the aforesaid provision is not applicable to your Bank.

57. Insider Trading Compliances

The Bank has adopted a policy on the Code of Conduct to Regulate, Monitor and Report Trading by Insiders (PIT Code), adopted in line with the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations). The policy is available on the website of the Bank at https://www.tmb.bank.in/pages/ Regulatory-Policies. The PIT Code, inter-alia requires, pre-clearance for trading in the securities and prohibits the purchase or sale of securities while in possession of Unpublished Price Sensitive Information (UPSI) and during the closure of trading window.

The Board has also adopted a Board approved Code of Practices and Procedures for Fair Disclosure of UPSI, which is available on the website of the Bank at https://www.tmb.bank.in/pages/Regulatory-Policies. The

Board reviews the PIT Code on an annual basis and whenever required. The PIT Code has been reviewed by the Audit Committee of the Board and the Board and made certain changes therein in order to provide more clarity in certain clauses as per recent development in the aforesaid Regulation. The Company Secretary of the Bank acts as the ‘Compliance Officer in terms of the PIT Code and Regulations and is responsible for implementation and overseeing compliance with the PIT Code across the Bank.

The Bank had also undertaken various initiatives during the financial year to spread awareness amongst the employees of the Bank about the provisions of the PIT Code and Regulations. The Bank had automated the process for submission of declarations and disclosures by designated persons electronically through software. Further, your Bank has maintained the Structured Digital Database (SDD) internally with adequate internal controls, in compliance with the provisions of Regulation 3(5) of the PIT Regulations. The report on the compliance with the PIT Code is also submitted to the Audit Committee of the Board/ Board periodically.

58. Acknowledgment

The Board of Directors are grateful for the valuable guidance and support received from the Government of India, various State Governments, regulatory bodies such as RBI, SEBI, IRDAI, MCA, IBA, UIDAI, PFRDA, CERSAI, as well as to all the shareholders, Lenders, Credit Rating Agencies for their unwavering support and trust in the Bank.

The Board would further like to express appreciation to BSE Limited, National Stock Exchange of India Ltd., National Securities Depository Limited, Central Depository Services (India) Limited, Registrar & Share Transfer Agent, Vendors and Service Providers for their continued support & co-operation.

The Board also wishes to place on record its profound appreciation for the commitment and valuable contribution of the Banks Staff at all levels and looks forward to their continued involvement with commitment towards achieving the future goals.

Lastly, our sincere thanks to all our customers in India and abroad and our shareholders for their patronage and continued faith in Brand TMB as we strive to improve the Banks position and performance on an ongoing basis and remain strongly committed to creating value for our stakeholders.

59. Conclusion

This year your Bank had achieved significant milestones, marking 104 years since its establishment - a truly commendable accomplishment.

Both the banking sector as a whole and your Bank, in particular remain committed to supporting the MSME segment through the effective rollout of initiatives introduced by the government and regulatory authorities. The Bank has adopted a prudent approach in expanding its operations while maintaining strong financial performance.

The Bank had overcome numerous challenges in its 104 year journey and looking forward your Bank remains poised to face any likely economic and banking challenges. Your Bank is optimistic, confident and resilient to rise to the occasion and turn challenges into opportunities. Driven by shareholder trust, the loyal and steadfast customers, the vibrant management team and the unwavering dedication of the employees, your Bank can navigate the future with great hope, renewed vigour and focus.

	For and on behalf of the Board of Directors
	K. Ramachandran
Place : Thoothukudi	Non-Executive Part-Time Chairman
Date : June 05,2026	(Independent Director)