Shares of Indian Overseas Bank gained as much as 9.32 per cent on Tuesday after the board of the bank approved issuing equity shares to the government on a preferential basis for the capital infusion of Rs 4,100 crore received during the fiscal year 2020-21. The stock was trading at Rs 16.60 up 3.11 per cent from its previous close, while the benchmark index, Sensex gained 0.25 per cent to 48,003.88.
The bank in its extraordinary general meeting (EGM) of shareholders to be held on 12 May will take shareholders’ approval to issue 24.65 million equity shares at Rs 16.63 each to the Government of India on a preferential basis.
In September, as a part of the first batch of supplementary demand for grants for 2020-21, Parliament in the monsoon session gave approval for infusing Rs 20,000 crore in public sector banks (PSBs) in the current financial year to meet regulatory requirements. In 2019-20, the government made a capital infusion of Rs 70,000 crore into PSBs. Of this, IOB got Rs 4,360 crore. In November, Indian Overseas Bank (IOB) had sought a capital support of about Rs 1,000 crore from the government in order to create a buffer for any exigency.
The public sector bank posted a net profit of Rs 212.87 crore for the quarter ended 31 December 2020 against net loss of Rs 6,075.49 crore for the corresponding quarter last year. Total income jumped 11.3 per cent to Rs 5,786.54 crore in December 2020 quarter from Rs 5,197.94 crore in the same quarter last year.
According to the latest shareholding pattern, the Government of India held 95.84 per cent stake in the bank.