Indian Overseas Bank plans ₹4,000cr equity raise, Govt stake to fall to 90%

As of March 31, the government has a 94.61% stake in the Indian Overseas Bank.

Capital Infusion Aimed at Compliance and Growth

Indian Overseas Bank (IOB) plans to raise up to ₹4,000 crore in equity capital during FY 2025-26, which will reduce the Government of India’s shareholding in the bank from 94.61% to 90%, said Ajay Srivastava, Managing Director & CEO, during the post-earnings call on May 2.

Shareholder and Regulatory Approval Pending

The proposed capital raise is subject to approval by shareholders via the Annual General Meeting (AGM) or Extraordinary General Meeting (EGM), in addition to other statutory and regulatory approvals.

Capital Raise in Tranches

Also read: Nirala World, Sea Fund launch ₹2,000cr AIF to revive stalled RE projects

The equity will be raised in one or more tranches during the financial year. The move is in line with the bank’s broader strategy to improve its capital adequacy and prepare for future growth.

Recent QIP Successful

In March 2025, IOB successfully closed a Qualified Institutional Placement (QIP), raising ₹1,436 crore by issuing 35.41 crore equity shares to institutional investors.

SEBI Norms Drive Dilution

As per SEBI regulations, all listed companies must maintain a minimum public shareholding (MPS) of 25%. Although the deadline for public sector undertakings (PSUs) was originally August 1, 2024, it has been extended to August 1, 2026.

The planned capital raise is expected to help IOB move closer to meeting this regulatory requirement.