 "IOB gets shareholders' nod to raise up to Rs 3,500 crore")
"We have already appointed a merchant banker for the proposed QIP," said M Narendra, chairman and managing director of Indian Overseas Bank.
When the market conditions improve, the bank would look at QIP and rights issue; and the bank was also planning to seek around Rs 1,200 crore from the government, he said.
Also Read
On the bank's financial performance, Narendra said despite NPA concerns and a sluggish growth in advances, it had managed to report profit growth.
Indian Overseas Bank posted a net profit of Rs 271.7 crore for the quarter ended June 30, 2014, when compared with Rs 125.7 crore for the same corresponding period last fiscal.
"The growth was primarily due to increase in interest income", said Narendra.
Besides, it came on account of operational efficiency, better fund management and an increase in branch-level profit.
Its total income during the quarter under review increased to Rs 6,284.6 crore, up from Rs 6187.1 crore last year.
He said the bank had set a target to recover and upgrade around Rs 3,500 crore during the current fiscal.
Last year, it had recovered cash worth Rs 1,550 crore, while Rs 1,100 crore had been upgraded. The incremental NPA during the quarter ended June 30, 2014, stood at Rs 2,648.74 crore.
"During the first quarter this year, the bank recovered and upgraded accounts to the tune of Rs 540 crore as against Rs 388 crore for the corresponding period a year ago," he said.
The Bank also offloaded assets worth Rs 589 crore, whose sale value was higher than the current market price.
On the outlook, the Bank had set a target of 12-15 per cent for credit disbursals, while it estimates a overall growth Bank estimate at 15-18 per cent.
Bank's advance rose by 6.25 per cent to Rs 1,77,309 crore as on June 30, 2014.
Total business of the Bank as on June 30, 2014 stood at Rs 3,99,188 crore as compared to Rs 3,63,087 crore.
Indian Overseas Bank has received shareholders' approval to raise capital up to Rs 1,200 crore by way of Qualified Institutional Placement (QIP).
As reported earlier, the proposed fund raising is in view of certain expansion plans of the Bank, the implementation of Basel III norms, and consequent capital charge and there is a need to increase the capital to further strengthen the Capital Adequacy Ratio, according to the Bank officials.
The Bank today announced that the in its Annual General Meeting, the shareholders approved the proposal for raising of capital by way of QIP up to Rs 1200 crore including share premium subject to regulatory approvals.
It also added that M Narendra, chairman and managing director of the Bank, also said that there will be increased attention on reduction of NPAs through intensive recovery measures throughout the year and ensuring maintenance of asset quality. It would also focus on implementation of a multi pronged strategy to improve profitability under increased retail composition, maintaining higher incremental average CD ratio, high yielding advances and focus on credit monitoring.
As reported earlier, the Capital Adequacy Ratio (CAR) of the Bank as on March 31, 2014, as per Basel III is 10.78 per cent, well above the nine per cent 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.