Indian Overseas Bank has successfully completed its Basel III compliant Tier II bonds issue worth ₹1,000.00 crores, receiving an exceptional response from investors that resulted in the issue being oversubscribed by 6.52 times. The bank received total bids amounting to ₹3,264.00 crores against the base issue size, demonstrating strong investor confidence in the institution.

Bond Issue Structure and Performance

The bond issue was structured with a base size of ₹500.00 crores and an additional green shoe option of ₹500.00 crores, bringing the total issue size to ₹1,000.00 crores. The bank has accepted bids worth ₹1,000.00 crores at a coupon rate of 7.80%.

Bond Specifications

The Series VI bonds are non-convertible, taxable, subordinated, unsecured, listed, and fully paid-up Basel III compliant Tier II bonds in the nature of debentures. The issue consists of 1,000 bonds with a face value of ₹1.00 crore each.

Issue Timeline and Response

The bond issue had a swift timeline, opening and closing on January 22, 2026, with the deemed date of allotment being January 23, 2026. The issue was conducted through BSE Electronic Bidding Platform, reflecting the bank's commitment to transparent and efficient capital raising processes.

The substantial oversubscription of 6.52 times indicates strong market appetite for Indian Overseas Bank's Basel III compliant instruments. Out of 60 bids received, the bank accepted 29 bids, demonstrating selective acceptance while meeting the targeted issue size. This successful capital raising exercise strengthens the bank's Tier II capital base in compliance with Basel III norms.

Indian Overseas Bank has reported its first double-digit deposit growth in two years, signaling a potential turnaround for the Chennai-based public sector lender. MD & CEO Ajay Kumar Srivastava announced that savings deposits grew 11.36% year-on-year, while retail term deposits under ₹3.00 crore surged nearly 16%, marking a significant improvement after industry-wide deposit growth challenges.

Q3FY26 Financial Performance

The bank's third-quarter results for FY26 demonstrated strong operational metrics across key parameters:

Srivastava emphasized that Indian Overseas Bank stands as the only lender where net interest margins increased in both Q2 and Q3 despite four rate cuts by the Reserve Bank of India during this period.

Strategic Focus on RAM Segment

The bank maintains its strategic emphasis on the retail, agriculture, and MSME (RAM) segment, which now represents 76-77% of its total loan portfolio. This conscious strategy, implemented over the past four to five quarters, has delivered consistent double-digit growth both quarter-on-quarter and year-on-year.

Retail growth is primarily driven by housing loans, vehicle financing, loans against property (LAP), and general lending products. The bank's extensive branch network enables RAM lending across nearly 99% of its branches nationwide.

Deposit Growth Turnaround

After two years of industry-wide deposit growth struggles, Indian Overseas Bank's deposit performance shows marked improvement:

Srivastava noted that this deposit growth momentum, combined with the bank's balanced loan portfolio mix and careful deposit repricing management, has enabled the institution to protect and improve margins despite the challenging rate environment.

Credit Portfolio Composition and Strategy

The bank's credit portfolio demonstrates a balanced approach to interest rate risk management:

• MCLR-linked loans: 51% of portfolio
• Repo-linked loans: 42-43% of portfolio
• Domestic CD ratio: 81.81%
• Global CD ratio: 84-85%

Corporate lending remains selective due to pricing concerns, with Srivastava explaining that significant deviations between the bank's intended lending rates and corporate expectations have led to a cautious approach in this segment. The bank prioritizes value addition to its balance sheet over aggressive corporate lending.

Margin Protection Strategy

Despite multiple RBI rate cuts, Indian Overseas Bank has successfully maintained and improved its net interest margins through strategic portfolio management. The domestic NIM increased by 25 basis points from 3.17% to 3.42% between June and December, while global NIM rose by 11 basis points to 3.32%. This performance reflects the bank's effective management of both asset repricing and deposit cost optimization in a challenging interest rate environment.