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Indian Overseas Bank

BSE: 532388 | NSE: IOB |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE565A01014 | SECTOR: Banks - Public Sector

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Annual Report

For Year :
2019 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

The Board of Directors have pleasure in presenting the Annual Report together with Audited Balance Sheet and Profit & Loss Account of the Bank for the year ended 31st March, 2019.

Global Business performance

Global growth is projected at 3.3% in 2019 and 3.4% in 2020, with downside risks continuing to build. High policy uncertainty, ongoing trade tensions, and a further erosion of business and consumer confidence are all contributing to the slowdown. Global trade growth has slowed sharply and new orders continue to decline in many countries. The trade restrictions introduced last year are a drag on growth, investment and living standards, particularly for low-income households.

GDP growth in India has eased, but is projected to be around 7% per cent in FY 2019 and FY 2020. Business confidence and investment remain strong, and activity should benefit from easing financial conditions, accommodative fiscal policy and recent structural reforms.

The Bank continued its efforts towards rebalancing its Balance Sheet under the current year. The focus was laid on to improve the RAM portfolio with a view to mitigate the risk and improve capital efficiency. The Bank further reduced the concentration of Bulk deposits and improved the share of low cost deposits. The Global Business level stood at Rs. 3,74,530 crores as on 31st March 2019 against Rs. 3,67,831 crores as on 31st March 2018. The global deposits and gross advances stood at Rs. 2,22,534 crores and Rs. 1,51,996 crores respectively as on 31st March 2019 against Rs. 2,16,832 crores and Rs. 1,50,999 crores respectively as on 31st March 2018.

Financial performance

The efforts during the current year were aimed at sustaining the higher operational efficiency levels as the operating environment remained firm. The right sizing of balance sheet had its impact felt on the revenue streams substantially which was cautiously balanced with optimising the expenses. Focused attention was laid to improve the other income sources which helped the Bank to report substantial improvement in its operational efficiency. As a result, the Bank improved its operating profit which ended at Rs.5,034 crores in FY 2018-19 compared to Rs. 3,629 crores recorded in previous year.

Focused attention was laid on Gross NPA reduction which decreased and ended at Rs. 33,398 crores for FY 2018-19 as against Rs. 38,180 crores in FY 2017-18. The higher provision requirements of Rs.8772 crores during the year forced the Bank to report a Net Loss of Rs.3738 crores for the year. The Bank had reported Rs. 6,299 crores of loss during 2017-18.

Income and Expenditure Analysis

The rebalancing of asset side of the Balance sheet had major impact on the revenues of the Bank. Even though, the Bank got benefit from its focused attention on low cost deposit with a favorable Cost of Deposits, the marginal easing under NPA levels & Capital constraints restricted the growth opportunities to improve the income level. Maximum effort was laid on towards improving the Non interest income with higher thrust given on automating charges which has yielded results. It is noteworthy to mention that the Non Interest Income recorded a growth of 12.28% to end at Rs. 4,206 crores as against Rs. 3,746 crores recorded in FY 2017-18.

The domestic CASA deposits stood at Rs. 84,394 crores as on 31st March 2019 as against Rs. 78,739 crores as on 31st March 2018. The CASA% stood higher at 38.72% as on 31st March 2019 as against 37.43% as on 31st Mar 2018.

The higher level of CASA and reduction of the bulk deposits helped the Bank to reduce the domestic Cost of deposits which ended at 5.49% for FY 2018-19 as against 5.62% in FY 2017-18. The yield on domestic advances came down to 7.41% for FY 2018-19 as against 7.91% in the previous year.

The domestic yield on investments stood at 6.97% for the whole year 2018-19 compared to 7.77% in FY 2017-18. The Bank was able to maintain the global Net interest margin at 2.08% in 2018-19 as against 2.19%. The Bank maintained a Provision Coverage Ratio of 70.19% for FY 2018-19 as against 59.45% for FY 2017-18.

Capital Raised during 2018-19

Capital Infusion by Government of India

The Bank issued 137,30,10,821 equity shares of Rs.10/-each for cash at issue price of Rs. 15.71 per equity share (including premium of Rs.5.71 per equity share) aggregating to Rs. 2,157 crores to Government of India on Preferential Basis on 12th November 2018 for the capital infusion received from Government of India on 23rd July 2018 and 269,54,67,422 equity shares of Rs.10/- each for cash at issue price of 14.12 per equity share (including premium of Rs.4.12 per equity share) aggregating to Rs.3,806 crores to Government of India on Preferential Basis on 28th March 2019 for the capital infusion received from Government of India on 21st February 2019.

Employee stock purchase scheme

The Bank’s ESPS was launched for subscription on 31st December 2018 and the Issue was closed on 21st January 2019 as scheduled. The Bank issued and allotted 18,24,00,000 equity shares to its employees at a discounted price of Rs. 11.90 per share. In this process the Bank augmented its capital funds to the extent of Rs. 261 crores. IOB has scripted history by becoming the first public sector Bank to record 100% subscription to Esps. Disclosures required under SEBI (Share Based Employee Benefits) Regulations, 2014 read with SEBI circular no. CIR/CFD/POLICYCELL/2/2015 dated June 16, 2015 are available on the Bank’s website The IOB ESPS 2018 Scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014.

During the year under review, the shareholding of Government of India, has increased from Rs. 4,389.08 crores (89.74%) to Rs. 8,457.56 crores (92.52%) and the Public shareholding stands at Rs.684.09 crores (presently 7.48%). The paid-up capital of the Bank has increased from Rs. 4890.77 crores to Rs. 9141.65 crores.

Raising of Tier II Bonds

During the quarter ended December 2018, the Bank had raised Basel III Compliant Tier II bonds aggregating Rs. 300 crore on private placement basis at a coupon rate of 11.70% with tenor of 10 years from the date of allotment and with call option at the end of the 5th year or on any coupon payment date thereafter. M/s. CRISIL and M/s. ICRA have assigned ratings of CRISIL A /Stable and [ICRA] A (hyb)/ Negative for the Tier II Bonds Issue of the Bank.

Authorized Capital

As on 31st March 2019, the Authorized Capital of the Bank is Rs. 10,000 crores.

Capital Adequacy Ratio

The Bank’s capital adequacy ratio as on 31st March 2019 stood at 10.21 % as per Basel III norms.

Branch Network

The Bank has 3,280 domestic branches as on 31st March 2019 as against 3,332 branches as on 31st March 2018, comprising of 914 rural branches (27.87%), 965 Semi Urban branches (29.42%), 669 Urban branches (20.40%) and 732 Metropolitan branches (22.32%). The Bank also has 7 Zonal Offices, 48 Regional Offices, 3 Extension Counters, 2 Satellite Offices, 3 City Back Offices and 6 Zonal Audit Offices. During the year under review, the Bank has closed 53 branches and opened one branch.

Corporate Governance

Corporate Governance reflects the built in value system of the Bank in conducting its day to day affairs. The Bank recognizes the critical importance of effective Corporate Governance for the safe and sound functioning of the Bank and lays emphasis on ensuring that structures, processes and systems are put in place to establish strategic objectives to serve the interest of the Bank and its stakeholders with a view to facilitate effective monitoring.

IOB - Code of Conduct for Prohibition of Insider Trading, 2019

Pursuant to Regulation 9 of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, the Bank had formulated IOB Code of Conduct for Prohibition of Insider Trading, 2015, to regulate, monitor and report trading by the Directors, employees and other connected persons of the Bank with a view to comply with the provisions of the Regulations.

In view of the amendments vide SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2018, the Bank has now formulated IOB Code of Conduct for Prohibition of Insider Trading, 2019 effective from 1st April 2019. The new Code is prescribed to regulate, monitor and report trading by ‘Insiders’ limited to only ‘Designated Persons’.

SEBI (Listing Obligations and Disclosure Requirements Regulations), 2015 (LODR)

As per SEBI (LODR),

- The Bank is providing remote e-voting facility to its shareholders, in all Annual General Meetings/ Extraordinary General Meetings.

- The Code of Conduct is applicable to all members of the Board and the Senior Management (i.e., General Managers of the Bank).

- The Bank is submitting a quarterly compliance report on Corporate Governance to the Audit Committee of the Board and to BSE & NSE, where the shares of the Bank are listed.

- The Bank is also submitting Quarterly Investor Grievance Report to BSE & NSE.

Investor Education & Protection Fund (IEPF)

As per the guidelines of Ministry of Corporate Affairs (MCA), Government of India, the Bank transferred Unpaid Dividend amount pertaining to the year 2010-11 to IEPF on 7th September 2018. The unpaid dividend data pertaining to the years 2011-12 to 2013-14 is ported in MCA website and is also available at Accordingly, the Bank has complied with the guidelines of Government of India in respect of transfer of unpaid dividend to IEPF.

Bank is complying with all guidelines/regulations laid down by the Regulatory Authorities and Government of India from time to time. The Bank redresses the shareholders grievances without any delay.

Board of Directors

Shri Vishnukumar Bansal, Additional Director, two years’ term ended on 7th August 2018 and Shri Sivaraman Anant Narayan, Non-Official Director, resigned from the Board on 15th November 2018.


The Board of Directors are grateful for the valuable guidance and support received from the Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Stock Exchanges, State Governments, Financial Institutions and all Overseas Regulators. The Board of Directors acknowledge with thanks the valued Customers, Employees Union, Officers Association, domestic and international banking group, the shareholders & other stake holders for their valued support and continued patronage with the Bank.

The Board also wishes to place on record its profound appreciation for the valuable contribution of the Bank’s Staff at all levels and looks forward to their continued involvement with commitment towards achieving the future goals.

For and on behalf of the Board of Directors

Chennai R Subramaniakumar

9th May, 2019 Managing Director & Chief Executive Officer

Director’s Report