Indian Overseas Bank is mulling to raise funds through a perpetual bond sale and will soon seek approval from its board for the same, a top bank official said.

“We are planning to raise some funds through perpetual bond issuance and had already got the approval from our Alco (asset-liability committee). We will soon seek board approval for this,” Chief Financial Officer T S Srinivasan told PTI over the weekend.

He, however, didn’t divulge how much the bank is planning to raise. Perpetual bonds are quasi-equity in nature and are considered as part of the tier-I capital.

The bond sale plan is part of its effort to ramp up the tier-I capital, which was below 8 percent at the end of the September quarter.

The public sector lender, which has sought Rs 1,500 crore from the government as capital infusion this financial year to increase its capital adequacy ratio, also said the amount of fund raising by the bank through alternate route will depend on the amount received from the government.

Finance Minister P Chidambaram, who held a meeting with public sector banks chairmen last week, had also said IOB, Bank of Maharashtra and Central Bank of India would need the maximum capital infusion from the government this year.

The government has budgeted Rs 15,000 crore for fund infusion into its banks this fiscal.

“The amount of capital we raise through alternate route will depend on the amount of infusion from the government,” Srinivasan said, adding the bank can look at raising money through QIP route if the market sentiment improves as the share price of the bank is currently trading at a discount to its book value.

Indian Overseas Bank reported a 23 percent drop in net profit to Rs 158.43 crore in the quarter ending September against Rs 207.46 crore reported in the same period a year ago.

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