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Indian Overseas Bank has asked the Centre around Rs 3,500 crore to meet the Tier I capital under Basel III norms in 2014-15. The Bank also requested the Government of India for the dilution of their shareholding in the Bank. Currently the Government, promoter holds 73.80% in the Bank.
Bank's today met at Chennai and gave nod to seek capital infusion from the Government after assessment. The Board also gave nod to the Bank to raise capital by way of issue of equity shares of Rs 10 each at a price determined by SEBI (ICDR) Regulations 2009, to GOI to the extent of their capital infusion.
Bank also got nod from the Board to issue equity shares of Rs 10 each to Qualified Institutional Buyers by way of Private Placement, up to an extent of not exceeding Rs 1200 crore (including the share premium) out of the shortfall in the Tier I Capital Requirement of Rs 3500 crore assessed by the Bank, according to Bank's announcement to BSE.
In March 2014, the Bank raised Rs 398.04 crore from Life Insurance Corporation through Preferential Basis. The fund raising was primarily to augment long term resources and maintain a Tier I capital adequacy ratio of desired level.
The Capital Adequacy Ratio (CAR) of the Bank as on March 31, 2014, as per Basel III is 10.78%, well above the nine% stipulated by the Reserve Bank of India (RBI).
However in view of certain expansion plans of the Bank, the implementation of Basel III norms, and consequent capital charge, there is a need to increase the capital to further strengthen the CAR.
IOB is also planning to raise around $500 million through MTN, which will cater mainly to overseas disbursement.
"Money through MTN will be raised in the next 2-3 months and mostly it will be in one tranche," said M Narendra, chairman and managing director, IOB.
Earlier the Bank raised around $1 billion through MTN, in different tranches and the money was deployed in various sectors including pharma, steel projects, mines, acquisitions in overseas, ECBs for infrastructure and manufacturing projects etc.,
