The Indian Overseas Bank (IOB) plans to raise a little over Rs 1,000 crore through a Qualified Institutional Placement (QIP), public issue, rights issue, preferential issue.
The proposed fund raise 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, said the management.
The bank also said that it will raise around $500 million through medium-term notes (MTN).
M Narendra, chairman and managing director, Indian Overseas Bank (IOB), said the bank plans to raise around Rs 1,000 crore through a QIP.
In March 2014, the bank raised Rs 398.04 crore from Life Insurance Corporation through preferential basis. The fund-raising was primarily to augment long term resources and maintain a Tier I capital adequacy ratio of desired level.
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 9 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.
In the upcoming Annual General Meeting (AGM), the Bank would seek its shareholders' approval for a resolution that will enable the Bank to offer, issue and allot equity shares/preference shares/ securities by way of public issue, rights issue,QIP, preferential issue or on a private placement basis.
International operations
IOB is also planning to raise around $500 million through MTN, which will cater mainly to overseas disbursement.
"Money through MTN will be raised in the next 2-3 months and mostly it will be in one tranche," said Narendra.
Earlier, the bank raised around $1 billion through MTN, in different tranches and the money was deployed in various sectors including pharma, steel projects, mines, acquisitions in overseas, ECBs for infrastructure and manufacturing projects.
IOB currently has two branches in Hong Kong and Sri Lanka and one each in Singapore, South Korea and Bangkok. Last year 2013, IOB's Extension Counter at Sri Lanka was upgraded into a branch with due regulatory approvals increasing the number of branches at Sri Lanka to two.
According to IOB's Annual Report the Bank is taking up for/awaiting RBI's permission for upgrading its representative office at Dubai, Vietnam and China into full fledged branches.
Ministry of Finance has allocated the overseas centres for opening of overseas joint venture or wholly owned subsidiary, by the Bank in Thailand, Vietnam, Mongolia, Srilanka and Republic of Korea.
Bank has obtained RBI permission for opening a branch at Sukhumvit, Thailand. This branch is expected to commence operations before August 2014. FCBU in Colombo has commenced operations from January 2014. IOB's remittance Centers operating at Boon Lay and Serangoon, Singapore and representative offices are located in Guangzhou (China), Ho Chi Minh City (Vietnam) and Al Karama, (Dubai).
