Indian Overseas Bank (IOB) has sought capital support of Rs 4,016 crore from the Central Government to fund its business growth for the three-year period beginning 2011-12.
This request has been made in the three-year business plan submitted by the bank to the Finance Ministry, Mr M. Narendra, Chairman and Managing Director, IOB, told Business Line here.
Of this Rs 4,016 crore, IOB has pegged the requirement for this fiscal at Rs 1,200 crore-Rs 1,400 crore.
Although necessary enabling resolutions are in place to raise equity capital from public, the bank is not looking to come out with any follow-on public offering (FPO) this fiscal, Mr Narendra said.
“We are only seeking capital infusion from the Government to fund our business growth. When the market is subdued, the Government should have higher holding and use this opportunity to increase stake,” he said.
In March 2011, IOB had received capital infusion of Rs 1,054 crore. Consequent to this capital infusion, the Centre’s stake in the bank increased to 65.87 per cent from 61.23 per cent.
On credit growth, Mr Narendra said the bank was aiming at a credit growth of 20-22 per cent this fiscal, lower than the 30-35 per cent growth targeted at the beginning of the current fiscal.
IOB’s loan book grew 41 per cent in 2010-11 compared with 6 per cent in 2009-10. Mr Narendra said that he does not expect the current fall in business sentiments to persist for a prolonged period.
“Credit pick-up in India depends on seasonal factors. We are going to soon enter into the busy season. We should not be unduly worried about the current slowdown in credit,” Mr Narendra said.
But he also noted that there are other factors like enabling policy environment, and international scenario that could influence credit demand
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