The Indian Overseas Bank (IOB) today said that it would require around Rs 1,100-1,200 crore of capital to achieve it’s 25 per cent growth in total business for the present fiscal. The bank has got its shareholders’ approval today for raising the capital through QIB, FII and others. However, the bank has said it will first look at Government of India’s infusion, according to the bank’s senior official.
Speaking on the sidelines of bank’s AGM today M Narendra, chairman and managing director, IOB said the bank has set a target to grow 25 per cent this fiscal. To achieve this target, around Rs 1,100-1,200 crore of capital would be required.
“We moved an enabling resolution at the AGM to raise the money in different modes including Qualified Institutional Buyers (QIBs), Foreign Institutional Investors (FIIs), Venture Capital Funds and others. Will use it when we required,” he said, adding, the Government of India, which holds 65.87 per cent in the bank had asked IOB to submit a detailed Business Plan 2014, said Narendra. “Depending upon the Government’s infusion plan, we would look at other modes,” said Narendra.
It may be noted, Government of India infused Rs 1,054 crore into Indian Bank primarily to augment long term resources and maintain a capital adequacy ratio (CAR) of around 8 per cent.
Bank’s CAR as on March 31, 2011 was 13.28 per cent, well and above the stipulated by the Reserve Bank of India.
“However in view of certain expansion plans of the Bank, the implementation of Basel II norms, and consequent capital charge, there is a need to increase the capital to further strengthen the CAR,” said Narendra.
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Commenting on expansion plans, he said, at present the bank has 2,184 branches and plans to add 400 this fiscal. At present the bank has six overseas branches in Hong Kong, Singapore, South Korea, Sri Lanka and has its representative offices at China, Vietnam, Dubai and Malaysia.
On Monday, bank’s board gave its nod to convert its representative office in Vietnam to a branch.
“We are also looking at 14 destinations including Nigeria, Africa, Australia and parts of Europe.”
The bank is planning to invest around Rs 50 crore to upgrade its branches domestically, said Narenda.
IOB’s total business grew by 35.20 per cent during the year ended March 31, 2011, to Rs 2,59,020 crore from Rs 1,91,577 crore, a year ago. Bank’s net profit rose 51.71 per cent to Rs 1,073 crore from Rs 707 crore.
According to IOB’s annual report sale of NPAs to Asset Reconstruction Companies : 37 NPAs from various regions with a book outstanding of Rs 415.03 crore, which were sold to Asset Reconstruction Company for a sale consideration of Rs 265.02 crore.