The Chennai-headquartered Indian Overseas Bank plans to mop up funds before the end of the current financial year to comply with the capital adequacy norms, considering its business growth.
The public sector bank has sought shareholders’ nod to mobilise up to Rs 413 crore, through issuance of 41.3 crore shares of the face value of Rs 10 each, either through fresh equity, rights issue, preference shares or qualified institutional placement.
The bank’s existing equity share capital stands at Rs 924 crore. The proposed fresh capital will take the total paid-up share capital to Rs 1,337 crore, which will be well within the total authorised capital of Rs 3,000 crore.
However, according to a senior official of the bank, the proposal is not concretised as yet. “We are yet to decide on the quantum and how to raise that amount.”
The bank is expected to grow at 14 per cent, which will necessitate an additional capital funds of Rs 2,300 crore by the end of the year, to take the tier-I capital adequacy ratio to 8 per cent from the current 7.8 per cent. At present, the Union Government holds 73.8 per cent stake in the bank, and the bank should ensure that the government shall at all times hold not less than 51 per cent of the paid-up equity capital, the source explained.
More branches
The annual report of the bank for the year 2012-13 says the Union Ministry of Finance has allocated Thailand, Vietnam, Mongolia, Sri Lanka and Republic of Korea for IOB to open its branches either through joint ventures or through wholly-owned subsidiaries in these countries.
In February, the bank had obtained RBI permission for opening a branch in Sukhumvit in Bangkok and a foreign currency banking unit in Colombo, says the report.