Indian Overseas Bank (IOB) shares fell after it said that Reserve Bank of India has taken "prompt corrective action" on the bank with the view to improve internal processes to deal with mounting non-performing assets.
Indian Overseas Bank (IOB) shares fell 2 per cent on Tuesday after it said that Reserve Bank of India has taken “prompt corrective action” on the bank with the view to improve internal processes to deal with mounting non-performing assets. The share price of Indian Overseas Bank closed 0.27 per cent down at Rs 37.25.
At 10.55 am, shares of IOB were down 1.87 per cent at Rs 36.65. Sensex was trading 82.21 points up at 26,867.76 during the same time.
“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 shares of the bank have slumped 41.3 per cent so far this year, under-performing a 6.1 pct fall in the NSE bank sub-index
Deepak Tewary, analyst at SPA securities, says RBI order is likely “precautionary” and intended to help improve IOB’s performance. He added IOB’s return on assets was below RBI’s threshold of 0.25 per cent for the three out of last four quarters, and may have triggered the action.
He expects measures to remain in place for at least two quarters.
Gross NPA of the bank rose to 9.40 per cent for the quarter ended June 30. IOB’s gross non-performing assets rose to 8.30 per cent at the end of March 31, from 4.84 per cent a year ago, according to the provisional RBI data taking into account domestic operations of banks.
With agency inputs