The Hindu Business Line : Restriction on holding stakes in other banks

INDIAN Overseas Bank, a 30 per cent shareholder in Bharat Overseas Bank, has sought exemption from the RBI norm which restricts banks from holding stakes in other banking entities beyond a certain limit.

IOB would like to continue its relationship with Bharat Overseas Bank, indicated Mr T.S. Narayansami, Chairman and Managing Director, adding that IOB is comfortable with the association as it stands at the moment. He was talking to newspersons here on Wednesday.

Bharat Overseas Bank, which is now owned by a group of seven entities, was established in 1973 to chiefly take over IOB's Bangkok branch. IOB is now its single-largest shareholder. The others hold far smaller stakes.

IOB, which has targeted a total business of Rs 86,000 crore this fiscal, is looking at a critical topline growth in the coming days. It is also looking at a further reduction in NPAs in the months ahead.

Meanwhile, a capital market subsidiary (for which a proposal was cleared earlier this year) may well be in the offing. However, nothing has been finalised on this front, it is clarified.

The bank, in which the government holds 62 per cent, is not looking forward to an immediate reduction of the government's equity, Mr Narayansami said. A Tier II capital infusion will, however, be necessary later this year.

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