Indian Overseas Bank Plans ₹5,000 Crore QIP; Government Stake May Fall To 86%

Indian Overseas Bank (IOB) plans to raise ₹5,000 crore through a qualified institutional placement (QIP) by the end of the December quarter or early in the fourth quarter of FY27, depending on market conditions. The proposed fundraise could reduce the Government of India’s shareholding in the public-sector lender from 92.44% to around 86%, according to comments by managing director and CEO Ajay Kumar Srivastava reported on October 26.

The bank already has approval to raise the amount during the current financial year and has obtained almost all the necessary approvals, Srivastava said. The proposed issue is intended to help the lender gradually reduce government ownership towards the 75% threshold, rather than address an immediate capital adequacy shortfall.

IOB QIP Could Reduce Government Holding To 86%

IOB plans to raise the entire ₹5,000 crore through a QIP, subject to market conditions and the final issue. The bank’s government shareholding currently stands at 92.44%. If the issue is fully subscribed, the holding could decline to approximately 86%, with dilution estimated at around 6%.

A QIP allows a listed company to issue shares to eligible institutional investors. Unlike a public offering open to retail investors, the placement is directed at qualified institutional buyers.

The proposed timing is not final. The bank has indicated that it could enter the market towards the end of the current quarter or at the beginning of Q4 FY27, depending on market conditions.

Indian Overseas Bank Q2 Net Profit Rises 56%

The QIP update comes after IOB reported a strong performance for the September quarter. On a standalone basis, the bank’s net profit rose 56% year-on-year to ₹1,912 crore in Q2 FY27, compared with ₹1,226 crore in the corresponding quarter last year.

Net interest income (NII) increased 26.4% to ₹3,867 crore from ₹3,059 crore a year earlier. Operating profit rose 25.7% year-on-year to approximately ₹3,016 crore.

The bank’s asset quality also improved. Gross non-performing assets declined to 1.19% of gross advances in the September quarter, compared with 1.83% a year earlier. Its capital adequacy ratio stood at 18.60% at the end of September.

IOB Also Plans $500 Million Overseas Borrowing

Separately, IOB plans to raise $500 million through external commercial borrowings by the end of December 2026. The borrowing is expected to be arranged in two equal tranches using the Reserve Bank of India’s concessional swap facility. The bank has said that around $250 million has already been finalised.

The overseas borrowing plan is separate from the proposed ₹5,000 crore QIP. Together, the initiatives form part of the bank’s funding and capital-management plans.

IOB shares closed at ₹30.34 on the BSE on October 26, up 5.71% for the session, following the bank’s Q2 results and fundraising update. This is the previous session’s closing price, not a live quote for October 27.

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