LIC to increase its stake in Indian Overseas Bank to 14.50 %

Insurer to infuse Rs 200 cr into the bank

Life Insurance Corporation of India (LIC) is increasing its stake in the Chennai-based loss making public sector bank Indian Overseas Bank (IOB) to 14.50 per cent from the current 10.21 per cent. The public sector life insurer will infuse Rs 200.04 cr into the lender.

The bank has called for shareholders' meeting to get their approval for the preferential issue.

In a note to the shareholders, the bank said that with a view to comply with BASEL III requirements relating to capital adequacy, there is an ever increasing need to raise capital. The bank's Capital Adequacy Ratio (CAR) Basel III during the quarter ended December 31, 2015 was at 9.73 per cent.

 

At the request of the Bank, LIC has agreed to subscribe to equity capital of the nank on preferential basis to the extent of Rs 200.04 crore, of which the bank would be allotting equity shares to the extent of 8,62,99,771 (i.e 14.5% of the post issue capital of the Bank), said IOB.

Post the issue, Government of India's stake will come down to 77.32 per cent from 81.19 per cent, while public shareholding will come down marginally to 8.18 per cent from 8.60 per cent.

The capital raised would be utilised to shore up the capital adequacy of the bank and to fund its general business needs.

During the quarter ended December 2015, IOB has reported a loss of Rs 1,425.06 crore as compared to loss of Rs 516.03 crore. Total Income has decreased from Rs 6,647.4 crore for the quarter ended December 31, 2014 to Rs 6,445.7 crore for the quarter ended December 31, 2015.

The bank's gross NPA during the quarter ended December 2015 rose to Rs 22,672.40 crore from Rs 14,500.51 crore, a year ago. In percentage terms it was increased to 12.64 per cent from 8.12 per cent. Net NPA rose to Rs 14,173.75 crore from Rs 9,511.15 crore, a year ago. In percentage terms it was at 8.32 per cent as compared to 5.52 per cent.