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Indian Overseas Bank has said that it is planning to raise around Rs 900 crore through QIP, private placement and other modes. The bank, which was in need of around Rs 2,100 crore capital, got a commitment from the Government of India, which is the major shareholder of the Bank, on Wednesday that it will infuse Rs 1,200 crore into the Bank, the proposed fund raising is to fill the gap, said Bank's senior official.
Speaking to Business Standard M Narendra, chairman and managing director, Indian Overseas Bank said that the Bank has received a Letter of Approval from the Government of India to infuse around Rs 1,200 crore capital.
He added, with the 14% credit growth, which the Bank set a target, the Bank would require around Rs 2,100 crore capital, taking into account a certain level of profit plough back into the Bank and for the balance money the Bank will look at options including private placement, QIP, perpetual bond.
“Depends up on the market condition, we will look at raising the money this fiscal or next fiscal in different tranches,” said Narendra.
IOB is one of the 20 public sector banks in which Government decided to infused around Rs 14,000 crore in 2013-14, through preferential allotment of equity in its favour. Government's stake in IOB currently stands at around 78.2%.
Indian Overseas Bank is one of the largest public sector banks in the country with a total business of over Rs 3.67 lakh crore and set a target to cross Rs 4.50 lakh crore. Going forward the Bank is planning to give thrust to SMEs and retail.
On the SME side of the total advance 12% are lend to SMEs, which Narendra want to increase to 15% in a year's time. IOB's exposure to this sector is now at around Rs 24,000 crore and target is to close the fiscal with Rs 30,000 crore, said Narendra.
Besides, being a traditional lending business the Bank is now planning to go one step further by giving advisory support, which venture capital or private equities generally does in an investee company for better performance.
IOB would be looking at increasing its market share from the current 2.75-2.8% to 3.5% in future and the Bank is also working towards to be among the top five nationalised banks in terms of business volumes, from the top seven position, said Narendra.
