Indian Overseas Bank to Raise Rs 4,000 Crore Equity Capital to Reduce Government Stake to 90%

Indian Overseas Bank (IOB) announced that its Board of Directors has approved a major initiative to raise equity capital of up to Rs 4,000 crore during the fiscal year 2025-26. The funds will be raised through a variety of mechanisms, including a Follow-on Public Offer (FPO), Rights Issue, Qualified Institutional Placement (QIP), Employee Stock Purchase Scheme (ESPS), Preferential Issue, or any combination of these options.

"We hereby inform that the Board of Directors of the Bank in its meeting held on May 2, 2025 (Friday), at Chennai inter alia: Approved to raise equity capital to a maximum extent of Rs 4000 crore, including Share Premium (if any), by way of Follow-on Public Offer / Rights Issue /Qualified Institutional Placement / ESPS/ Preferential Issue or any other mode or combination
thereof, in one or more tranches during FY 2025-26, subject to obtaining the approval of shareholders through Annual General Meeting (AGM)/Extraordinary General Meeting (EGM) and other necessary statutory/regulatory approvals, IOB said in its filing to BSE.

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IOB's Board of Directors also approved to raise Tier II capital by issue of BASEL III Compliant Tier II Bonds up to a maximum extent of Rs 1,000 crore depending upon the requirement, with or without green shoe option, in one or more tranches during FY 2025-26 by private placement or by way of public issue either domestically or overseas.

The move is subject to obtaining the approval of shareholders at the Annual General Meeting (AGM) or an Extraordinary General Meeting (EGM), along with other necessary statutory and regulatory approvals. The capital raise is aimed at enhancing IOB’s financial position, supporting its growth initiatives, and improving its lending capacity.

This announcement comes as part of the bank’s broader strategy to strengthen its balance sheet and ensure it remains well-capitalized for future expansion and to meet regulatory requirements. The equity capital raise is expected to be executed in one or more tranches during FY 2025-26.

In addition to this strategic move, the bank also approved its Audited Financial Results for the quarter and the financial year ending March 31, 2025. The state-owned bank reported a 30 per cent year-on-year (YoY) jump in standalone net profit to Rs 1,051.07 crore for Q4FY25 compared to a profit of Rs 808.10 crore in the same quarter last year.

IOB's operating profit before provisions and contingencies for the quarter under review stood at Rs 2,617.92 crore, up 33.5 per cent from Rs 1,961.11 crore in the same quarter last year. Its Net Interest Income (NII) increased 13 per cent YoY to Rs 3,123 crore.

Indian Overseas Bank (IOB), a prominent public sector bank, offers a wide range of financial services, including retail banking, corporate banking, and foreign exchange.