"The RBI has initiated a prompt corrective action on the bank and that this action will not have any material impact on the growth prospects or performance of the bank," IOB said in a filing on BSE.
The RBI has specified certain regulatory trigger points, as a part of prompt corrective action (PCA) framework, in terms of three parameters -- capital to risk weighted assets ratio (CRAR), net NPA and Return on Assets (RoA), for initiation of certain structured and discretionary actions in respect of banks hitting such trigger points.
IOB's gross non-performing assets rose to 8.30 per cent at the end of March 2015 from 4.84 per cent a year ago, according to the provisional RBI data taking into account domestic operations of banks.
"The directions given by the RBI are for improving the internal control of the bank and for the purpose of consolidation of the activities of the bank," it said.
Also Read
As per the PCA framework the bank is required to undertake special drive to reduce NPAs and contain generation of fresh NPAs; review loan policy and take steps to strengthen credit appraisal skills and follow-up of advances.
Last year, global rating agency Standard & Poor's (S&P) has cut long-term issuer rating for IOB from "BBB-" to "BB+" on sharp deterioration in the asset quality.
In a similar move, another rating firm Moody's too downgraded the rating of the bank.
Moody's warned that IOB's reserves and capital provide a narrow buffer against potential losses.