It all started in 2004 when NRI businessman C.

Sivasankaran's agreed to sale his stake in Tamilnadu Merchantile Bank to Nadar Community for Rs. 130 Crores, but deal didnt complete. But later Sivasankaran sale of nearly 33% stake in the private sector Tamilnad Mercantile Bank (TMB) to Indian and foreign investors four years ago. A. Foreign and Indian Investors- 24.93% in total Seven foreign investors i. Vangal's Katra Holding, ii. Ravi S Trehan's RST, iii. Rajat Gupta's GHI, iv. Kamehemaha Mauritius, v. FI Investments (Mauritius), vi. Cuna Group (Mauritius), and vii. Swiss Reinvestors (Mauritius) and Indian investors i. Gokul Patnaik and ii. Vector Programme

These investors paid 24,182 a share for the 10 paid-up share of bank. Besides the new non-Nadar investors, another 8% was picked up by influential Nadar businessmen and Indian investors such as MGM Maran and MG Muthu, PS Sathiyaseelan, Hemangini Finance and Leasing, Shanmuga Financial Services, L Sridhar, and N Ganeshan. R Chinnakannan and C Chandammal, the parents of Sivasankaran, were also part of this group. These investors had paid 6,050 a share. The shares where bought from four companies belonging to Sivasankaran's Sterling group. Now, Katra Group, Vector Program Private Limited and Shri Gokul Patnaik has entered into an escrow agreement with Standard Chartered Bank which allows M/s Corsair Capital of New York to find suitable buyer and sold the shares to them. EXIT DOOR STAKEHOLDERS WHO HAVE SOLD 13.09% SELLER: Katra Holdings (Ramesh Vangal): 3.64% RST Ltd (Ravi S Trehan): 1% BUYER: Subcontinental Equities Ltd (Standard Chartered Holdings SELLER: Vector Program (Ramesh Vangal): 4.73% BUYER: Star Ship Equity Holdings (AXA Group SELLER: Gokul Patnaik: 3.72% BUYER: East River Holdings (Kuwait Investment Agency) Brunei Investment Agency

Now, above mentioned buyers are being identified by M/s Corsair capital as purchaser of the shares basically being held by Katra Group, M/s RST Ltd. (Ravi S. Trehan), Vector Program Private Limited and Shri Gokul Patnaik.

It is interesting to note that Ramesh vangal, M/s RST Ltd. (Ravi S. Trehan), Vector Program Private Limited and Shri Gokul Patnaik has taken loan from SCB which will be repaid by selling these shares. The job to find the suitable purchaser was given to M/s Corsair Capital. In 2007, M/s Corsair Capital, a prominent New York based Private Equity firm, had introduced seven foreign investors who had interest in investing in TMBL shares. The seven foreign investors include Swiss Re Investors (Mauritius) Limited, FI Investments (Mauritius) Limited, Kamehameha (Mauritius) Limited and Cuna Group (Mauritius) Limited, in whose names transfer of shares was effected by TMBL on May 13, 2007 and another 3 foreign investors (i.e Subcontinental Equities Limited, East River Holdings Limited and Starship Equity Holding Limited) who have applied for transfer of shares. Out of the above mentioned 7 foreign investors 4 managed to purchase shares in Tamilnadu Mercantile Bank directly from C. Sivasankaran's. Now, Corsair comes into picture and got the shares for remaining 3 investors. Corsair did it by enforcing Escrow agreement. There is common directorship among Corsair and Swiss Re, Corsair and Standard Chartered Bankplc (where Subcontinental Equities Limited is a subsidiary of Standard Chartered Holdings, London). It can be further observed that M/s Corsair Capital has been attempting unilaterally to wrest control of all the shares of TMBL through the above named 7 entities. Now, Standard Chartered Banks three branches of different countries are involved, as mentioned below: a. SCB Mumbai, b. SCB Mauritius & c. SCB London.

SCB, Mauritius has extended a facility of USD 20 million to enable M/s Katra Holdings Limited to refinance a loan it had previously received in order to acquire shares in Tamilnadu Mercantile Bank Limited. SCB, Mauritius is not regulated by RBI guidelines.

In May 2000 RBI advised banks to promote an amendment to their Articles of Association to the effect that acquisition of shares by a person / group which would take his / its holding to a level of 5% or more of the issued capital (subsequently modified to total paid up capital) of the bank should be with the prior approval of RBI.

In my opinion following question are yet un-answered: 1. What is this escrow agreement that SCB has entered into with Ramesh vangal, M/s RST Ltd. (Ravi S. Trehan), Vector Program Private Limited and Shri Gokul Patnaik. 2. Why Corsair was the only facilitator who will find the suitable purchaser for the shares.