IOB to raise $500 mn via medium-term notes

Bank also seeks Rs 2,100 crore capital infusion from Govt to support its 20% growth target

Indian Overseas Bank (IOB) has said it is planning to raise around $500 million through Medium Term Note Programme (MTN) before December. The Bank has also asked the Government of India for another Rs 2,100 crore capital.

 

Speaking on the sidelines of opening IOB's 3,000th branch at Vaniankudi village, Sivaganga District (Union Finance Minister P Chidambaram's constituency), on Saturday M Narendra, chairman and managing director, Indian Overseas Bank said that by December this year the Bank would look at raising $500 million to support its international business.

 

At present the Bank's International loan book stands at Rs 22,508 crore, while total business (international) is around Rs 30,000 crore. IOB's branches and representative offices are at Thailand, Singapore, Hong Kong, Bangkok, Seoul, China, Vietnam and Dubai. The Bank is planning to reopen its Foreign Currency Banking Unit in Sri Lanka. The branches and offices caters to Indian Corporates for their international businesses.

 

“We are waiting for some stability in the Singapore and Hong Kong markets,” said Narendra.

 

In August last year, IOB raised $500 million through MTN. The Bank said the issue over subscribed by 10 times. 

 

Narendra further said, the Bank also asked the Government of India, which is the major shareholder, for Rs 2,100 crore capital to support its domestic business. 

 

“We hope they (the Government) will give reasonably well, if not fully and for the balance if market looks attractive and opens up we will go for rights issue and QIP,” he said. Last year Government infused Rs 1,000 crore into the Bank, against IOB's request of Rs 1,500 crore. 

 

The additional capital will help IOB to support its target of around 20 per cent growth in overall business during the current fiscal, said Narendra. IOB's total business currently stands at around Rs 3.67 lakh crore and plans to close the fiscal with a total business of around Rs 4.50 lakh crore. 

 

The Bank also said it is looking at increasing its NIM to three per cent from the current 2.43 per cent.

 

For the growth the focus will be on rural branches, retail, agriculture and SME credits, said Narendra, who set a target himself that IOB's new branches should break even in one year as compared to two years earlier. After he took charge as CMD of IOB in November 2010, Narendra opened over 1,000 branches of IOB across the country taking number of Bank's branches to 3,000 and another 500 are in pipeline.