Indian Overseas Bank Secures Approvals to Raise ₹40 Billion, Government Stake May Drop 4%

Indian Overseas Bank has successfully secured all required regulatory approvals to raise ₹40 billion from the capital markets by March. The fundraising will be conducted through a Qualified Institutional Placement (QIP), marking a significant capital mobilization effort by the public sector bank.

Fundraising Details and Timeline

The bank has completed the approval process for the substantial capital raise, with a clear timeline set for completion by March. The ₹40 billion fundraising represents a major financial initiative aimed at strengthening the bank's capital position.

Parameter:	Details
Fundraising Amount:	₹40 billion
Method:	Qualified Institutional Placement (QIP)
Timeline:	By March
Approval Status:	All approvals obtained

Impact on Government Shareholding

The QIP is expected to have a direct impact on the government's ownership structure in the bank. Post the ₹40 billion capital raise, the government's stake in Indian Overseas Bank is projected to decline by approximately 4%. This reduction reflects the dilutive effect of the new share issuance on existing government holdings.

Divestment Timeline Challenges

Despite the successful approval process, the bank faces challenges in meeting regulatory timelines for government stake reduction. Specifically, reducing the government stake to 75% by the August 1 deadline appears difficult to achieve. This timeline constraint highlights the complexities involved in the divestment process and regulatory compliance requirements.

Aspect:	Status
Current Government Stake Reduction:	4% (post-QIP)
Target Government Stake:	75%
Deadline:	August 1
Achievement Likelihood:	Difficult

The capital raising initiative represents a significant step in the bank's financial strategy, though the timeline for achieving the mandated government stake reduction remains challenging.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
+2.09%	-1.47%	-2.48%	-7.15%	-20.55%	+218.15%

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.

ISIN Code:	Issue Type:	Security Type:	Outstanding Amount (₹ Crores):
INE565A08035	Private Placement	Unsecured	500.00
INE565A08043	Private Placement	Unsecured	665.00
INE565A08050	Private Placement	Unsecured	1,000.00
Total			2,165.00

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:

Financial Parameter:	Value:
Debt Equity Ratio	1.76
Debt / Total Assets	0.88
Net NPA Ratio	0.24%
Net NPA / TNW	0.026
Capital Adequacy Ratio (CAR)	16.30%
Recovery Expense Fund	₹0.25 crores

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.