Karnam Sekar, MD & CEO of IOB, earlier had exuded confidence that the bank was on track of its plan to come out of prompt corrective action (PCA) framework by March 2020.
Chennai-based public sector lender Indian Overseas Bank (IOB) on Friday said it has been sanctioned a fresh capital infusion of Rs 4,360 crore by the Centre in the current financial year. IOB had received a capital infusion of around Rs 3,857 crore in September this year.
“The bank has received vide letter dated December 25, 2019, a sanction from government of India for release of Rs 4,360 crore towards contribution of the central government in the preferential allotment of equity shares (special securities / bonds) of the bank during 2019-20, as government’s investment,” IOB said in a filing to stock exchanges.
Reeling under the impact of the ageing sticky assets and consequent higher provisioning, IOB had reported over five-fold increase in its net loss at Rs 2,253. 64 crore for the second quarter of FY 2020, as compared to a net loss of Rs 487.26 crore in the corresponding quarter last fiscal.
The total income had declined by 6% to Rs 5,024 crore as compared to Rs 5,348.35 crore, even as provisions had gone up to Rs 2,996.04 crore during the quarter from Rs 2,016.60 crore in the same quarter last year.
On the asset quality front, the gross non performing asset (NPA) of the bank came down to Rs 28,673.95 crore during the quarter, which as a percentage of gross advances was at 20% as compared to Rs 37, 109.96 crore (24.73%) during the same period last year. Net NPA also came down to Rs 12,507.97 crore (9.84%) as compared to Rs 18,876.05 crore (14.34%) during the same period last year.
Karnam Sekar, MD & CEO of IOB, earlier had exuded confidence that the bank was on track of its plan to come out of prompt corrective action (PCA) framework by March 2020. With the September quarter results, the bank was closer to the goal, when compared to the June quarter performance, he had said.
The NPA percentage is one of the criteria to come out of the PCA. According to him, by December quarter, the bank would be able to bring down the net NPA percentage to 6% and by March quarter, the bank could start making profit.