IOB expects Rs1,450 crore capital infusion by government

Indian Overseas Bank (IOB) expects the government to infuse fresh capital of up to Rs1,450 crore in the PSU bank by February 2012, its chairman and managing director M Narendra told newspersons in Chennai today.

"We have made a request to the government and will be requiring up to Rs1,450 crore," he said, adding, "it will come this fiscal itself." He, however, declined to comment on the route to be used for this infusion.

IOB's core Tier-I capital stood at 7.02 per cent as of 30 September, and the government had earlier said that it will ensure a tier-I component of 8 per cent in all banks.

The Chennai-headquartered bank had raised Rs1,053 crore from the government last fiscal, which saw the government's stake go up to 66 per cent. Narendra said the earlier infusion had come in the last quarter and likewise, he expects the allocation to come in by the end of the current fiscal.

The bank reported a sluggish growth of a little over 1 per cent in its net profit for the September quarter, at Rs413.04 crore. Narendra attributed the slowdown in profit growth to higher provisioning requirements.

A majority of the total provisions of Rs636.41 crore arose as a result of the bank migrating to the system-based NPA generation.

On the impact of the Reserve Bank of India's move to deregulate savings bank account interest, Narendra said the rates will definitely go up and IOB will take a call on it shortly.

The share of the cheaper current and savings account (CASA) deposits for the bank dipped to 27.46 per cent from 33.09 per cent a year ago. In order to achieve its target of taking up the CASA to 35 per cent, IOB plans to take its overall branch network to 4,000 by end of fiscal 2003, Narendra said.

It is also planning to increase its international footprint by setting up a presence in 14 new geographies in a phased manner, he said.