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In January, the government said it will recapitalise public sector banks, including Rs 800 billion through recapitalisation bonds and Rs 81.39 billion as budgetary support for 2018.
Out of Rs 46.94 billion, Rs 41.32 billion will be infused through recapitalisation bonds.
The Bank has said that post the infusion, the government's stake will increase by 7.49 per cent to 89.90 from 82.41 per cent currently.
IOB said that, with a view to comply with BASEL III requirements relating to capital adequacy, there is never-increasing need to raise capital. GOI proposes to infuse additional equity capital into the Bank as part of its commitment to strengthen the government owned financial institutions and banks.
The capital raised would be utilised to shore up the capital adequacy of the Bank and to fund the general business needs of the aank. At present, the authorised capital of the bank is Rs 100 billion and the paid-up equity share capital of the bank is Rs 28.52 billion.
The bank has reported a net loss of Rs 9.71 billion during the third quarter ended December 2017 as compared to Rs 5.54 billion, a year ago.
However sequentially, the loss dropped by 20.56 per cent from Rs 12.22 billion.
The Chennai-based lender, which has been reeling under high NPAs, is confident of turning around by this time next year. To back the argument, the bank has stated that sequential losses have been coming down. For example, compared to second quarter, losses in the third quarter was down by 20.59 per cent. The bank is also confident it will find resolution for NPAs worth Rs 50 billion by the first quarter, which will add to profit.
"We will turnaround by the third quarter of next fiscal and the measures we are taking is showing results also," said R Subramaniakumar, Managing Director and CEO of IOB.
As at December 2017, bank's gross NPA was Rs 332.67 billion crore as against Rs 345.02 billion a year ago.
There has been a reduction in gross NPAs by Rs 14.41 billion during the third quarter as compared to the second quarter, which stood at Rs 347.08 billion.