Indian Overseas Bank (IOB) and Punjab & Sind Bank have announced plans to raise ₹4,000 crore and ₹3,000 crore respectively through Qualified Institutional Placements (QIPs) this quarter. The combined fundraising of ₹7,000 crore represents a significant capital mobilization effort by these public sector banks.

IOB's Capital Raising Initiative

IOB Managing Director Ajay Kumar Srivastava confirmed that the bank has received all required approvals for the QIP and is currently appointing merchant bankers for the share sale. The bank plans to execute the capital raise either next month or in March, depending on prevailing market conditions.

Government Shareholding Impact

The QIP will further reduce the government's stake in IOB by 4% from the current level of 92.40%. The government's promoter holding had already declined from 94.60% in December following a 2.20% dilution through an offer-for-sale of the Chennai-headquartered lender.

Regulatory Compliance Challenges

Despite the capital raising efforts, Srivastava acknowledged that meeting the August 2026 deadline to achieve the minimum 25% public shareholding will be challenging. "It will be difficult by August 2026," he stated, highlighting the complexities in achieving the regulatory requirement.

Punjab & Sind Bank's Fundraising Plans

Punjab & Sind Bank will hold an extraordinary general meeting on January 21 to consider and approve raising equity capital up to ₹3,000 crore through a QIP. The bank aims to meet capital requirements for its growing business, comply with Basel-III norms, and achieve minimum public shareholding requirements. The bank has reported 15% year-on-year growth in advances to ₹1.11 lakh crore, with the government currently holding 93.90% stake.

Broader PSB Compliance Scenario

The government holding remains above the regulatory cap in several public sector banks, including Central Bank of India at 89.30% and UCO Bank at 91%. The Securities & Exchange Board of India has mandated public sector banks to comply with the minimum 25% public holding norm by August this year.

Indian Overseas Bank has filed its Security Cover Certificate for the quarter ended December 31, 2025, with the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) in compliance with Regulation 54(2)/(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The submission was made on January 14, 2026, by Ram Mohan K, the bank's Compliance Officer.

Outstanding Debt Securities Portfolio

The bank maintains a portfolio of listed non-convertible debt securities totaling ₹2,165.00 crores as of December 31, 2025. All outstanding securities are unsecured in nature and were issued through private placement.

Independent Auditor Verification

R. Devendra Kumar & Associates, Chartered Accountants (FRN: 114207W), serving as one of the bank's Central Statutory Auditors, has provided independent verification of the security cover certificate. Partner Neeraj Golas (Mem. No.: 074392) signed the auditor's certificate on January 14, 2026, confirming that the security cover data has been accurately extracted from the bank's unaudited financial statements for the quarter ended December 31, 2025.

The auditors conducted their examination in accordance with the Guidance Note on Reports or Certificates for Special Purposes issued by the Institute of Chartered Accountants of India and SRS 4400 - Engagements to perform Agreed-upon procedures regarding Financial Information.

Regulatory Compliance and Covenants

The bank has demonstrated compliance with various covenants outlined in the Information Memorandum for its unsecured bonds. Key financial metrics as of December 31, 2025, include:

The bank confirmed timely payment of both interest and principal on due dates, with no defaults reported during the period from April 1, 2025, to December 31, 2025.

Credit Ratings Status

Indian Overseas Bank maintains stable credit ratings from multiple agencies:

• CRISIL: AA/Stable (valid until June 27, 2025)
• India Ratings: AA/Stable (valid until January 17, 2025)
• CARE: AA/Stable (valid until September 29, 2025)
• ICRA: AA/Stable (valid until November 12, 2025)

Trustee Arrangements

The security cover certificate was submitted to designated trustees IDBI Trusteeship Services Ltd. and SBICAP Trustee Company Limited, who oversee the bank's debt securities in accordance with regulatory requirements. The bank maintains its Recovery Expense Fund with BSE as per covenant obligations.

The submission fulfills the bank's quarterly reporting obligations under SEBI regulations and provides transparency to investors regarding the security cover maintained for its outstanding debt securities.