IOB to raise $250-500 mn through MTN in next 6 yrs

State-owned Indian Overseas Bank may raise $250-500 million through medium term notes (MTN) in the next six months, a top official said here today.

The bank is all set to raise Rs 1200 crore by way of Upper Tier-II Bonds on a private placement basis, said its Chairman and Managing Director M Narendra.

An MTN is a debt note that usually matures (is paid back) in 5–10 years. They can be issued on a fixed or floating coupon basis.

"We are also examining raising medium term money. We may raise the amount in another six months. It may be between $250-500 million," he told reporters.

 

He said the board of directors of the banks recently cleared and accorded sanction for raising Rs 1,700 crore by way of PNCPS (Perpetual Non-Cumulative Preference Shares) through Qualified Institutional Placements, Rs 250 crore by way of Tier-I (Perpetual) Bonds, Rs 1,000 crore by way of Lower Tier-II Bonds and Rs 1,200 crore by way of Upper Tier-II Bonds on a private placement basis.

"We recently raised Rs 1,000 crore lower tier capital at the rate of 8.95 per cent. We have also concluded and will be raising Rs 1,200 crore upper tier capital at 9 per cent. We have other provisions in terms of preference shares or equity in the later date," he said.

Replying to question Narendra said the bank has an exposure of Rs 500 crore to micro finance sector of which Rs 400 crore is in Andhra Pradesh.

"As of now we stopped further lending to MFIs. We will wait till Malegam report is submitted. We don't see any problem as of now in our loan recoveries," he said.

The MD said it will be setting up a bank in Malaysia in joint venture with Andhra Bank and Bank of Baroda shortly.