IOB to raise capital, go for new software solution

CHENNAI, INDIA: Government-owned Indian Overseas Bank (IOB) is looking at raising funds through the issue of medium term note, rights/public issue and from the government to fund its growth this fiscal and also go for new core banking solution (CBS), said a top official.

Announcing the bank's unattractive performance for 2012-13 here Monday, chairman and managing director M.Narendra said: "We are looking at raising funds through medium term note, rights issue, public issue. We plan to raise around Rs.2,350 crore to support our growth target of 18-20 percent this fiscal."

He expected the government to infuse additional capital this fiscal after giving Rs.1,000 crore capital last year.

Narendra said the bank had requested the government for a capital of Rs.1,500 crore last year.

According to him, the bank has selected consultancy firm Ernst and Young as its advisor in selecting a CBS vendor.

Narendra said the bank is looking only for CBS and not for the hardware in a major way.

Meanwhile, IOB closed last fiscal with a drastic fall in its net profit to Rs.567 crore from Rs.1,050 crore posted during 2011-12.

Narendra attributed the fall to higher provisioning towards non-performing assets (NPA) and expected the trend will reverse this fiscal.

He said the bank's gross NPA at the end of last fiscal stood at Rs.6,607 crore up from Rs.3,920 crore.

The net NPA as at 31.3.2013 is Rs.4,027 crore as against Rs.1,907 crore as on March 31, 2012.

He said the NPA in the industrial and services sector stands at Rs.2,653 crore and Rs.1,527 crore respectively.

"This year our focus will be on recoveries," Narendra said.

Last fiscal the bank's total business stood at Rs.366,501 crore (deposits Rs.202,135 crore advances Rs.164,366 crore) as against Rs.3,21,707 crore (deposits Rs.178,434 crore, advances Rs.143,273 crore) logged during 2011-12.