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9
January 2018
 |
IOB (The Total Investment & Insurance Solutions)
State-run
Indian Overseas Bank (IOB) has announced its plans to set off its accumulated
losses with funds from its share premium account.
In
a release late on Monday, IOB said it intends using Rs 7,650 crore in its share
premium account to write off its accumulated losses worth Rs 6,978.94 crore.
The decision, approved by the bank board last week, will now be put to vote at
an extraordinary general meeting (EGM) on January 30.
"The
Bank proposes to utilise the balance in its share premium account as at 31.03.2017
of Rs 7650.06 crore to set off its accumulated losses on that date of Rs
6978.94 crore so as to present a true and fair view of the financial position
of the Bank," the statement said. The
Total Investment & Insurance Solutions
"Necessary
approvals have been obtained. The Bank is convening an extraordinary general
meeting on 30.01.2018 for the purpose of obtaining the approval of the
shareholders for the proposal," it added.
According
to IOB, the bank is only setting off its losses to strengthen its balance sheet
and and not writing these off . The Total
Investment & Insurance Solutions
"The
proposed utilisation of share premium account to set off accumulated losses is
a balance sheet neutral action. Book value of shares, Bank's net worth, equity
capital structure and shareholding pattern will all remain unchanged," it
said. The Total Investment & Insurance Solutions
"No
reduction in the paid-up share capital of the Bank Ais contemplated in the
proposal . Capital adequacy ratios will not be impacted thereby."
IOB
has recently been brought under the Reserve Bank of India (RBI)'s prompt
corrective action (PCA) framework which forces banks to increase recoveries of
bad loans, reduce risky loans and strengthen their capital base, among other
measures, in order to improve their balance sheet position .
The
RBI has brought 11 state-run banks, including IOB, IDBI Bank, Allahabad Bank,
Central Bank of India, UCO Bank and Bank under the PCA owing to their weak
financial health caused by the huge accumulation of non performing assets
(NPAs), or Abad loans.The Total Investment
& Insurance Solutions
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