Indian Overseas Bank (IOB) plans to raise $500 million (around Rs 2,750 crore at the current exchange rate) through the issue of medium term notes in 3-6 months.
According to Mr M. Narendra, Chairman and Managing Director, IOB, the amount would be used to fund the bank’s overseas operations.
“A number of Indian corporates need funds for their overseas operations. The amount raised through the MTN issue will be lent as medium term loans (5-6 years) to these corporates,” Mr Narendra told newspersons on the sidelines of a banking conclave organised by the Federation of Indian Chambers of Commerce and Industry here on Thursday.
The bank is awaiting licence for the upgradation of its representative offices in China, Vietnam and Dubai. Overseas business accounts for about 10 per cent of its revenues and 22 per cent of its profits, he said.
Capital raising
IOB will also require capital of Rs 1,500 crore to fund its growth needs this year. The fund would be raised partly through ploughing back of profits and partly by way of government funding.
“We have to assess our fund requirement based on the business plan, estimated profits level and possibility of recovery of bad debts and submit it to the Government for its consideration,” he said.
The bank had received Rs 1,440 crore from the Government in 2011-12. Capital adequacy ratio of the bank stood at 13.32 per cent as on March 31, 2012.
IOB aims to achieve 18-20 per cent credit growth this year. The bank hopes to improve its net interest margin to 2.85-3 per cent (2.75 per cent) by the end of this year.