IOB to augment Tier II capital

By Our Corporate Reporter

CHENNAI, FEB. 1. Indian Overseas Bank is ready with a blue-print to mobilise Rs. 125 crores to augment its Tier II capital and take care of capital adequacy, Mr. R. V. Shastri, Chairman and Managing Director, told The Hindu .

The bank came out with a public issue of equity shares of Rs. 10 each at par in September 2000 for Rs. 111.20 crores which was subscribed to the tune of 1.9 times.

In an informal chat he said the voluntary retirement scheme launched by the bank had received good response with 3,900 employees (14.2 per cent of the workforce) opting for it.

The bank has released the first list clearing 2,000 applications. The amount involved would be around Rs. 140 crores and this would be amortised over a five year period, he said. The immediate cash outgo would be only 50 per cent and for the balance amount the bank would issue 10 per cent bonds. Asked whether the post VRS scenario would pose a challenge in serving customers, he said there would not be any difficulty with technology upgradation and automation.As for any moves to float a subsidiary to enter the gilts market, Mr. Shastri said there were no such plans as the bank was active in trading in government securities.

To a question whether the bank had any plans to enter the insurance segment, he said as such there was no such proposal. At best they would distribute the products and the better option would be to act as an agent for selling the products of Life Insurance Corporation which had a proven track record in this area, he said.

The CMD said with the entry of private sector banks and foreign banks in the last ten years, public sector banks had lost only one per cent of their business on an average annually.

Mr. Shastri said the focus would be on the retail segment and the bank had deployed Rs. 130 crores in direct and Rs. 110 crores in indirect housing segments in the current financial year till November last. Under the educational loan scheme, the other priority area, the bank had deployed Rs. 30 crores. It had also introduced a `Home Decor' scheme providing loans for furnishing homes and purchase of equipment such as furniture and airconditioners.

The CMD said the net non-performing assets had come down to 7.46 per cent from 7.6 per cent and hoped there would be a further reduction as the bank had arrived at a settlement of loans pertaining to 3,158 cases involving an amount of Rs. 58.74 crores. Already an amount of Rs. 13.25 crores had been recovered and a major portion was expected before March this year, he said.

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