IOB plans ₹5,000cr QIP to dilute govt stake

Chennai: Indian Overseas Bank (IOB) plans to raise Rs 5,000 crore through a qualified institutional placement (QIP) in the coming months. If the issue is fully subscribed, the Union government’s stake in the Chennai-headquartered public sector bank is expected to fall to around 86% from 92.4%.The bank is returning to the market after a gap in FY26, when it deferred fundraising amid unfavourable market conditions triggered by the West Asian crisis.“We have already got approval to raise Rs 5,000 crore from the market, and the process is under way. It will be through a qualified institutional placement (QIP), either at the end of Q3 or in early Q4 of this fiscal, depending on market conditions,” IOB MD & CEO Ajay Kumar Srivastava told TOI here on Monday.Stating that the fundraising was not intended to meet growth capital requirements, Srivastava said the bank’s capital adequacy ratio, measured by the Capital to Risk-Weighted Assets Ratio (CRAR), stood at 18.6%.“Every quarter, we are adding to the growth capital. Since the Government of India holds a 92.4% stake and there is a mandate to bring it down to 75%, we have to reduce it gradually. This QIP of Rs 5,000 crore is one step in that direction,” he added.Meanwhile, the public sector bank posted a 56% year-on-year increase in net profit to Rs 1,912 crore in the quarter ended Sept 30, 2026, compared with Rs 1,226 crore in the corresponding quarter last year.Operating profit rose 25.7% year on year to Rs 3,016 crore in Q2 FY27, from Rs 2,400 crore in Q2 FY26. Net interest income (NII) grew 26.4% year on year to Rs 3,867 crore, while domestic net interest margin (NIM) increased by 14 basis points year on year to 3.5% in the quarter ended Sept 30, 2026.Earlier, Srivastava said the bank had raised $1.2 billion through FCNR(B) deposits. “We are targeting to raise about $500 million through external commercial borrowings (ECBs) by the end of Dec 2026. Out of this, around $250 million has already been finalised, which will happen in a week or so,” he said.Asked about festive demand, he said the bank had not experienced any decline in demand during the festive season.You use AI every day. Now get your AI Quotient. Take the AIQ test.