IOB seeks investors' nod for QIP of Rs 1,300 crore

The bank's gross amount of NPAs was Rs 30,049 crore at the start of this financial year

Ailing public sector lender Indian Overseas Bank (IOB) has finalised a turnaround strategy, with a focus on bad loan recoveries, credit monitoring, human resource management and development. 

The bank is also moving an enabling resolution to raise about Rs 1,300 crore from qualified institutional buyers. Qualified institutional placement (QIP) allows an Indian-listed company to raise capital from its domestic markets without the need to submit any pre-issue filings to market regulators.

The bank has sought investors’ nod for the QIP.

R Subramaniakumar, the bank’s managing director and chief executive officer, said in a letter to shareholders that the bank has finalised a turnaround strategy to improve operating efficiency and productivity.

IOB’s principal focus is on maximising recovery and minimising fresh slippages, as gross non-performing assets (NPAs) stood at Rs 35,098 crore at the end of March 2017. 

The bank has made a recovery of Rs 9,014 crore including Rs 803 crore in written-off accounts. NPAs to the extent of Rs 3,629 crore were upgraded during the year. The bank said regional heads were advised to visit borrowers, who have defaulted on loans, at least four days in a week and a 15-member special recovery team has been formed in every region.  

A daily recovery report mechanism and outreach programme was introduced wherein all the 434,000 NPA borrowers of up to Rs 1 crore were met personally within a quarter. The gross NPAs stood at Rs 35,098 crore for March 2017 as against Rs 30,049 crore in 2015-16. 

The higher provision for NPAs, Rs 7,067 crore, forced the bank to report a net loss of Rs 3,417 crore in FY17, up from the loss of Rs 2,897 crore a year ago.