Indian Overseas Bank set to raise Rs 1,200 cr

Indian Overseas Bank (IOB) plans to raise around Rs 1,200 crore as Tier-I capital. The bank has submitted the proposal to the Union government, which is the single largest shareholder of the bank.

Meanwhile, the bank's plans to launch an information technology subsidiary are being delayed.

Chairman and Managing Director M Narendra on Thursday told reporters, “We are looking at raising around Rs 1200 crore through Tier-I in the current financial year to maintain capital adequacy ratio at eight per cent. In case we do not get Tier-I capital from the government, we may go for other fund-raising options.”

It March, the Union government had infused Rs 1,054 crore into the bank through the issue of equity shares on a preferential basis. This had raised the government's stake to 66 per cent.

On raising funds through medium-term notes (MTNs), Narendra said the second tranche of $500 million would be raised in two-three months. Initially, the bank would raise only $350 million.

The bank had issued MTNs in Singapore, oversubscribed to the extent of $1.9 million. Of the total $1 billion, the Chennai-based public sector bank issued the first tranche of $500 million recently.