Indian Overseas Bank has received a penalty order of Rs 8,23,79,584 from Central Goods and Services Tax (CGST) authorities, which the bank disclosed under Regulation 30 of SEBI listing requirements on 30.03.2026. The penalty stems from the bank's actions during enforcement proceedings under the SARFAESI Act in FY 2020-21.

Penalty Details and Background

The order was issued by the Commissioner (in-situ), CGST, Delhi West Commissionerate under Section 74(9) of CGST Act, 2017. The penalty relates to consideration received by the bank during its statutory enforcement actions as a secured creditor under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

Nature of the Disputed Transaction

The penalty concerns the bank's possession of a building and leasehold rights in a secured asset and its subsequent transfer through e-auction to a purchaser during FY 2020-21. Indian Overseas Bank took these actions in exercise of its statutory powers under the SARFAESI Act as a secured creditor.

Bank's Position vs Authority's Stance

The bank has contested the penalty on several grounds:

• Bank's Contention: The bank argues that when acting under SARFAESI provisions, it merely enforces its security interest and facilitates transfer of secured assets, and cannot be treated as a "supplier" under GST law
• Transaction Nature: The bank maintains that the transaction is involuntary and statutory in nature, arising from enforcement proceedings rather than commercial supply
• Authority's Position: The tax department contends that all essential ingredients of "supply" under Section 7(1)(a) of CGST Act, 2017 are satisfied, citing Paragraph 2(a) of Schedule II which deems lease, tenancy or license to occupy land as supply of service

Bank's Response and Expected Impact

Indian Overseas Bank is preparing to file an appeal before the appropriate forum against the penalty order within prescribed timelines. The bank has indicated several key aspects of its response strategy:

Regulatory Compliance

The disclosure was made pursuant to Regulation 30 read with Schedule III of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The bank filed the requisite Form A disclosure detailing the communication from regulatory authorities, as required under Industry Standards Note on Regulation 30 of the LODR Regulations.

The bank's Deputy General Manager and Company Secretary, Raghuram Mallela, signed the disclosure documents, confirming the information provided is true, correct and complete to the best of his knowledge and belief.

Indian Overseas Bank has announced a strategic partnership with Avio Smart Market Stack through the placement of a purchase order for Customer Business Correspondent (CBC) services. This collaboration marks a significant step in the bank's rural expansion strategy.

Partnership Details

The agreement between the two entities is structured as a comprehensive three-year rural banking contract. This extended timeframe demonstrates both parties' commitment to building sustainable banking infrastructure in rural markets.

Strategic Objectives

The partnership aims to achieve two primary objectives that align with India's financial inclusion goals. The first focus area involves expanding last-mile delivery services to reach previously underserved rural populations. This expansion will enable better access to banking services in remote areas where traditional banking infrastructure may be limited.

The second objective centers on employment generation within rural communities. By establishing CBC services, the initiative is expected to create job opportunities for local residents, contributing to economic development in these regions.

Rural Banking Enhancement

This collaboration represents Indian Overseas Bank's continued efforts to strengthen its presence in rural markets. The CBC model allows the bank to extend its services through local business correspondents, creating a more accessible banking network for rural customers.

The three-year contract duration provides stability for implementation and allows for the development of sustainable banking relationships within rural communities. This approach supports the broader goal of financial inclusion while leveraging technology-driven solutions to overcome geographical barriers.