The board has also permitted the bank to issue equity shares of Rs 10 each to Qualified Institutional Buyers by way of Private Placement, up to an extent of not exceeding Rs 1,200 crore out of the shortfall in the Tier I Capital requirement of Rs 3,500 crore assessed by the bank.
State-owned Indian Overseas Bank (IOB) today said it has requested the government to provide a capital support of Rs 3,500 crore during the current fiscal. "The bank has requested Government of India, Ministry of Finance, Department of Financial Services to infuse capital fund to meet Tier I Capital under Basel III norms to an extent of Rs 3,500 crore for the current financial year, 2014-15," IOB said in a BSE filing.
Last fiscal, the government infused Rs 1,200 crore in the bank to enhance its capital base. Besides, it said, the board has also permitted the bank to issue equity shares of Rs 10 each to Qualified Institutional Buyers by way of Private Placement, up to an extent of not exceeding Rs 1,200 crore out of the shortfall in the Tier I Capital requirement of Rs 3,500 crore assessed by the bank.
Also Read: Had good recoveries & upgrades in Q4, says IOB
The bank has also requested Ministry of Finance for the dilution of their shareholding in the bank, it said. "The permission is accorded to the bank to raise capital by way of issue of equity shares of Rs 10 each at a price determined by SEBI Regulations, to government to the extent of their capital infusion," it said. The capital requirement for the bank for 2014-15 is Rs 3,500 crore.
The government infused Rs 14,000 crore in public sector banks during the current financial year ending March 31, 2014. Of this, the State Bank of India got Rs 2,000 crore while IDBI Bank received Rs 1,800 crore. In view of the Basel III or global prudential banking norms, all banks have been planning to shore up their Tier I capital.
According to the Reserve Bank, Indian lenders will require an additional capital of Rs 5 lakh crore to meet the new global banking norms - Basel III. The government, which owns 70 per cent of the banking system, alone will have to pump in Rs 90,000 crore equity to retain its shareholding in the public sector banks (PSBs) at the current level to meet the norms. Of the total Rs 5 lakh crore, equity capital will be of the order of Rs 1.75 lakh crore and Rs 3.25 lakh crore as non-equity. The RBI recently extended the deadline for Basel III implementation in a phased manner by banks by one year March 2019.
IOB stock price
On June 12, 2014, Indian Overseas Bank closed at Rs 84.90, down Rs 0.45, or 0.53 percent. The 52-week high of the share was Rs 89.90 and the 52-week low was Rs 37.15.
The company's trailing 12-month (TTM) EPS was at Rs 4.87 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 17.43. The latest book value of the company is Rs 130.90 per share. At current value, the price-to-book value of the company is 0.65.
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