Indian Overseas Bank today said it will utilise the funds in its share premium account to write off accumulated losses of over Rs 6,978 crore at the end of previous fiscal.
The share premium account is an equity account on a company's balance sheet and the amount in the account represents the additional amount shareholders paid for their issued shares that was in excess of the par value of those shares.
The bank said it has a balance availability in the share premium account of Rs 7,650.06 crore as on March 31, 2017.
The board of directors today considered and approved to utilise the balance to "write off the accumulated losses of the bank aggregating to Rs 6,978.94 crore as at March 31, 2017," the bank said in a regulatory filing.
Indian Overseas Bank said it is being done to present a true and fair view of the financial position of the bank and to take the same into account during the current financial year 2017-18.
The bank has convened an extraordinary general meeting of shareholders on January 30 to get shareholders' approval for this write off, it added.
For the fiscal ended March 2017, the bank had reported a net loss of Rs 3,416.74 crore on its balance sheet because of huge amount of bad assets, with the gross non-performing assets (NPAs) hitting 22.39 per cent of the gross advances as on March 31, 2017.
In the second quarter ended September of the current financial year, bank widened its net losses at Rs 1,222.50 crore, against Rs 765.13 crore loss in same quarter of 2016- 17.
The gross NPAs or bad loans stood at 22.73 per cent as on September 30, 2017, up from 21.77 per cent by the same period of 2016.
Stock of Indian Overseas Bank closed 2.89 per cent up at Rs 23.15 on BSE.
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