Indian Overseas Bank Officers' Association (IOBOA), the officers' trade union in IOB, has extended support to the management decision of balance sheet management by setting off the accumulated loss with the share premium amount. The move is aimed at giving out a fair, true and clearer picture of bank's balance sheet, which will infuse confidence in the minds of investors, it said.
"The move will also benefit the customer and it is shortening the time limit for dividend declaration by the bank as we are able to see the light at the end of the Tunnel with regard to earning the profit," said the organisation in a statement. It may be noted that the Bank's move to use the share premium account of Rs 76.50 billion to set off the accumulated losses to the tune of Rs 69.79 billion raised the eyebrows of many.
"This is a prudent and wise move in cleansing the balance sheet and to have a true picture of the financial position of the Bank," said the Association.
Consequently, IOB will be in a position to declare dividends sooner, with a clean balance sheet, as the bank had posted a 29 per cent growth in operating profit in the second quarter and the same is poised to improve further, it added.
The move will neither alter the Asset Position, tweak the shareholding nor will affect the Net worth of the bank. Further, the Bank will also not write off impaired asset popularly referred to as NPA. The shareholder's interest is sought to be protected.
As the movement has been flagged off by various stakeholders including the RBI and the Ministry of Finance, the Bank is confident of getting the nod of shareholders in the Special Extraordinary General Body Meeting on January 30, 2018, said President T Murali Soundararajan and general secretary, B Srinivasan.