The Hindu : Business : IOB considering GDR issue

Online edition of India's National Newspaper
Thursday, Apr 14, 2005

Business

Business

IOB considering GDR issue

P. S. Suryanarayana

No merger plans for now

SINGAPORE: Indian Overseas Bank (IOB) is considering a proposal to raise $120 million through a Global Depository Receipts (GDR) issue. The bank hopes to be the "first nationalised bank" in India to go in for a GDR issue. So far, only State Bank of India, which is in a category of its own, has followed this route.

Indicating this, the IOB Chairman and Managing Director, S. C. Gupta, told journalists during his current visit to Singapore that the GDR issue might be given a "final shape" in the next three or four months. Emphasising that the bank's board had yet to approve the proposal, he said securing endorsement of the Reserve Bank of India and the Centre for a "dilution of the Government's shareholdings" through a GDR issue "is not a difficult process".

The stock exchanges in London, Luxembourg and Singapore were among the destinations that the bank was now considering for listing the GDR-related shares. The question of "accounting principles" would be one of the factors behind the final choice of a stock exchange. Mr. Gupta said, in response to questions, that the Monetary Authority of Singapore was informed of the possibility of IOB going in for a GDR issue.

Mr. Gupta said the issue proceeds would be used for "asset expansion, for better capital adequacy [ratio] and to prepare ourselves Basel-II [requirements]."

After the GDR issue, "we may think in terms of extending our wings" overseas, he said. Right now, IOB had five branches abroad and one "limited branch," besides two marketing offices. The bank hoped to be able to open representative offices within a month, one each in Malaysia and China. These would be upgraded into branches in three to four years.

About the IOB's profile of funds from non-resident Indians, Mr. Gupta said bank now held $ 400 million to $ 450 million.

In answer to a question, Mr. Gupta said the IOB now had no plan to take over or merge with any other bank.

IOB's Chief Executive in Singapore, K. P. Munirathnam, said the bank's Remittance Centre here had gone in for innovations like a "remit card" to cater to the Indian workers who send money home. The bank was now examining how best to implement "an online credit system."

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