Indian Overseas Bank is in serious trouble, not because of the losses it is making, its just because of 20.48% of advances are gross NPA’s and its capital adequacy ratio (CAR) is below RBI stipulated 9.6% and stands at 9.47%
RBI has mandated the banks to maintain a minimum CAR of 9.6%, for which IOB has already breached. Even though according to the disclosure by the bank, the CAR would change to 10.37% after capital infusion of Rs 1551 Cr by first round of capital infusion by Govt. of India. It has also stated that their will be a second round of funding by Govt of India to the tune of Rs 1551 Cr again.10.37% is still a not good CAR to maintain for a bank like IOB as the NPA are very high. The bank has already raised Rs 261.94 Crs by Qualified Institutions Placement in the current quarter.
This is going to be crazy: at 20% Gross NPAs, 1 in 5 loans are bad! This bank better raise capital fast, because what it has will be wiped out with the losses.
The results were declared post market hours. Stock closed at Rs 27.3.
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