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Mr S. G. Gupta, CMD, Indian Overseas Bank, with G. S. Mehta, General Manager, at a press conference in the Capital on Friday

NEW DELHI, May 23

INDIAN Overseas Bank (IOB) will be hitting the capital market around September with its second public issue of equity shares, aggregating Rs 100 crore. The issue would result in pruning the Government holding in the bank to 61 per cent from the present 75 per cent. IOB had come out with its initial public offer (IPO) in September 2000.

At a press conference here on Friday, the IOB Chairman and Managing Director, Mr S.C. Gupta, said the details of the issue would be finalised by end-June. He said going by the share's current market price, which is hovering around Rs 24, he would expect the premium to be around Rs 10 on a share of Rs 10 face value.

Mr Gupta said after the public issue this year, the capital adequacy ratio of the bank should cross 12 per cent, from 11.32 per cent at the end of March 31, 2003. "We want to have a healthy capital adequacy ratio in view of the fact that in 2005 the Basle Accord will be implemented, leading to a tightening of prudential norms," he said.

The IOB Chairman also said the bank was contemplating the return of Rs 50-75 crore capital to the Government. "It (return of capital) is in the thinking stage. It will be finalised in consultation with the Government of India and the approval of the board," Mr Gupta said.

IOB recently declared a net profit of Rs 416.10 crore for 2002-03, an 80.7 per cent rise from the previous year's Rs 230.21 crore. The operating profits for the year rose to Rs 794.13 crore from Rs 616.36 crore in the previous year. "We have already got the results for April this year. Going by the trend, I am sure this year will also be a bumper year of profits for the bank," Mr Gupta said.

He said the bank was making full efforts at recovering non-performing assets (NPAs). While cash recoveries for the year ending March 31, 2003, was to the tune do Rs 236 crore, the bank has set a target of Rs 250 crore for the current year. While gross NPAs of the bank stood at 10.32 per cent, the net NPAs was 5.25 per cent at the end of the previous fiscal.

Mr Gupta said the bank had sent out 1,800 notices under the Securitisation Act involving an amount of Rs 499 crore, of which Rs 23 crore had already been recovered. "During the year, the legal hurdles (of selling attached properties) would hopefully be removed and the recoveries will improve," he said.

Replying to a query, Mr Gupta said the bank had no plan to go in for a second round of VRS on its own. "If there is an industry-side VRS devised by the Government, we would be willing to offer it to our staff. Otherwise we are not interested," he said.

On the proposed buyback of Government debt, Mr Gupta said IOB had identified Rs 840 crore of illiquid securities which is likely to be put up for auction from among its Rs 18,000-crore portfolio of Government securities. The bank would expect to earn a profit of Rs 200-225 crore from the buyback.

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