Indian Overseas Bank mulls FPO next fiscal

Hyderabad, Feb 17 () Indian Overseas Bank (IOB), whichhas been in the red for the last four-and-a-half years, ismulling to raise funds through a Follow-on Public Offering(FPO) next year, a senior official of the state-owned lendersaid here on Monday. Ajay Kumar Srivastava, Executive Director IOB, said thatthe FPO idea was still "at the drawing board level" and theBoard would take a decision on the quantum of funds to beraised and the percentage of stake to be diluted. The centre holds nearly 95 per cent stake while LIC hasthree per cent and others-two per cent in the bank, which iscurrently under the Prompt Corrective Action (PCA) frameworkof the Reserve Bank.

Raising money from public is on the cards. We plan to doit in the second or third quarter. We will go to the marketwith FPO.

First we have to go to our Board, we have to go to RBIand SEBI also ( for necessary approvals).

It is on the drawing board, but nothing has beenconcretised. But it is in our action for next year, he toldreporters at a press conference here. The centre recently increased IOB's authorized capitalfrom Rs 10,000 crore to Rs 25,000 crore.

The Government also infused Rs 4,360 crore capital intothe bank.

He said the Chennai-based lender is in the process ofimproving its performance in terms of controlling Non-performing Assets (NPA) and Net Interest Margin (NIM). The banks NIM is currently at about 1.94 per cent and isexpected to touch two per cent during the current quarter.

"It would take another three of four quarters to touchthe three per cent-NIM... We will prefer to go for FPO afterwe come out of PCA, he said.

The Reserve Bank of India's PCA framework, which intendsto nurse financially weak banks back to health, restrictslending and expansion of lenders. Srivastava said going forward the focus of the creditwould more for MSMEs and wants to be recognized as "MSME-focused bank".

He said currently the exposure to the sector is Rs 31,000crore and efforts are on to take it Rs 50,000 crore in thenext 18-24 months.

IOB also classified 200 of its branches as "MSME-focused". GDK APRAPR APR

(This story has not been edited by Business Insider and is auto-generated from a syndicated feed we subscribe to.)

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