Indian Overseas Bank on Monday said it has convened an extraordinary general meeting (EGM) next month to seek shareholders' approval for issuance of preferential shares to government for Rs 4,100 crore capital infusion in 2020-21.
The EGM will be held on May 12, 2021 through video conferencing or other audio visual means, the bank said in a regulatory filing.
The meeting will consider and pass the resolution to create, offer and allot up to 246,54,23,932 shares of Rs 10 for cash at issue price of Rs 16.63 per equity share including premium of Rs 6.63 aggregating to Rs 4,100 crore on preferential basis to Government of India, it said.
With a view to comply with BASEL III requirements relating to capital adequacy, there is an ever increasing need to raise capital, the lender said.
The government has infused additional equity capital into the bank as part of its commitment to strengthen the public sector financial institutions and banks.
"The capital raised would be utilized to shore up the capital adequacy of the bank and to fund the general business needs of the bank," it said.
Last month, the government had sanctioned release of Rs 4,100 crore for 2020-21 as its investment in lieu of preferential allotment of equity shares to the bank. At present, the government's holding in the bank is 95.84 per cent and it will go up to 96.38 per cent post the preferential allotment of shares to it.
The bank's present authorised capital is Rs 25,000 crore and the paid-up equity share capital is Rs 16,436.98 crore. IOB stock closed 4.44 per cent down at Rs 16.15 on BSE.