This Indian bank is attracting the Govt’s attention for all the wrong reasons

Apparently, the finance ministry has put Indian Overseas Bank (IOB) under scan after it has cleared out loans worth Rs 3,000 crore in the first half of this year. They are checking the bank's approval process, to be sure that there was no unlawful activity.

"It is being discussed with the bank. There was a review meet and the bank is submitting its response," one of the officials told ET, demanding anonymity.

This is not the first time that IOB has raised eyebrows; thanks to its poor performance, it already comes under the RBI's prompt corrective action (PCA) regime. This happens when a lender crosses threshold limits on the capital to risk-weighted assets ratio (CRAR), net non-performing assets (NPAs) and return on assets (RoA).

Talking of the records, IOB's CRAR at the end of June was 9.75% and it posted a net loss of Rs 551 crore for the July-September quarter. It is also reported that there had been routine drops on some loans, which were made without the requisite approvals by the committee.

Gross NPAs at IOB rose Rs 2,973 crore or 15% to Rs 19,424 crore at the end of September from the previous quarter, as per the financial results of the bank. The gross NPA ratio of the bank was 11%, as compared with 7.35% last year.

Earlier this week, finance minister Arun Jaitley had asked state-run banks to take off bad loans from their balance sheets; he also said that the government was willing to help them by taking the corrective measures needed.

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