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Rao Bahadur T.M. (Thalakodi Madathil) Appu Nedungadi, who was famous as the first Malayalam novelist by writing the first Malayalam novel, titled Kundalatha, established Nedungadi Bank in 1899 at Calicut in Kerala. It was first private sector commercial bank to be set up in South India. The bank was incorporated in 1913. In 1964 it acquired the Cochin National Bank in Trichur, and then the year after Nedungadi took over selected assets and liabilities of the Coimbatore National Bank (est. 25 January 1933). Cochin National Bank had three offices and Coimbatore National Bank had only one.
In 2002 the Joint Parliamentary Committee (JPC) probing a stock scam pointed out discrepancies in the conduct of business by Nedungadi Bank. In 2003 Punjab National Bank took it over. At the time of the merger with PNB, Nedungadi Bank's shares had zero value, with the result that its shareholders received no payment for their shares.