Indian Overseas Bank (IOB) is expecting a Rs 1,000-crore capital infusion from the government. Though the bank would require close to R1,500 crore, the government has agreed to provide Rs 1,000 crore by subscribing to preferential shares, said M Narendra, chairman and MD, IOB.
Narendra said besides bank?s ploughed bank profits, other means to raise funds could be explored.
?Though the bank has got enabling resolution passed to go for a rights issue, we think it is not the right time for it. The bank could also tap other government financial institutions like Life Corporation of India, which infused around R300 crore last time?, he said.
Narendra said the capital adequacy ratio of the bank is comfortable with Basel II and even for Basel III, bank?s tier I capital would be around 8%.
As part of the capital infusion process, the board of directors of the bank has approved to issue shares of face value of R10 with premium on a preferential basis to the government and LIC India (under its various schemes) up to an amount of R1,542 crore, including premium under preferential allotment.
The board has also approved the convening of an extraordinary general meeting (EGM) on March 18 in Chennai for obtaining approval from shareholders in a bid to complete the formalities by March 31.
The total capital funds of the bank stands at R17,219.94 crore as of December 31, 2012 against R15,137.30 crore as of December 31, 2011. The increase in capital funds was on account of infusion of capital to the tune of R1,743 crore from the government and LIC India, besides addition of net profit for the year 2011-12.