Shares of Indian Overseas Bank rose for the second day. Know why

Indian Overseas Bank, a government-owned lender, rose for the 2nd day after it made a preferential issue to the government in exchange of funds to boost its lending.

IOB, 73.8 percent owned by the government, allotted 48.56 crore shares to the government at a price of 41.37 rupees each to raise 2,008.99 crore rupees. The amount will help IOB improve its capital adequacy and augment lending.

IOB jumped 5.9 percent to 37.55 rupees in late afternoon trade. More than 1 crore shares of IOB were traded versus a 5-day average of 20.88 lakh shares on the National Stock Exchange. The stock made it to the top volume buzzers list on the NSE.

IOB's market capitalisation has fallen 40 percent in the past one year to 4,391 crore rupees as investors stayed away from PSU lenders in the wake of rising non-performing assets. IOB is trading at one-third its book value of 113 rupees per share.

Image credit: Indiatimes