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Indian Overseas Bank (IOB) said it planned to raise Rs 1,626 crore from the government of India and Life Insurance Corporation of India (LIC) this financial year, via a preferential allotment of equity shares.
The Chennai-based public sector lender said the government of India had told them it would infuse Rs 1,200 crore.
The bank’s board of directors met on Tuesday and gave its nod to issue equity shares to the government and LIC. These shares, with a face value of Rs 10 each and a preferential premium, will be worth Rs 1,626 crore.
It also decided to issue perpetual bonds up to Rs 2,497 crore and authorised the chairman to fix the size and terms of the issue.
No time line was given for this decision. The bank recently said it planned to raise Rs 900 crore through qualified institutional placement (QIP), private placement and other modes.
IOB was in need of Rs 2,100 crore of capital and had secured a commitment from the government of India.
IOB is one of 20 public sector banks (PSBs) in which the government had decided to infuse a total of Rs 14,000 crore this financial year, through preferential allotment of equity in its favour. The government's stake in the bank is currently at 78.2 per cent.
IOB is one of the largest PSBs, with yearly business of Rs 3.67 lakh crore.
The bank lent 12 per cent of its total advances to SMEs and was eyeing to increase it to 15 per cent within a year, said M Narendra, chairman and managing director.
The bank’s exposure to this sector was Rs 24,000 crore and its target was to close this financial year with Rs 30,000 crore, he added.
