IOB plans to launch financial services arm in FY12

 Indian Overseas Bank (IOB) is planning to launch a financial services subsidiary in FY12, besides setting up exclusive branches to give gold loans . Simultaneously, it also looks to raise resources through medium-term notes. 

Speaking to ET, M Narendra, chairman and managing director, Indian Overseas Bank, said, “We have an approval from the Reserve Bank of India to start an NBFC. We will use this to offer a bouquet of products, including wealth management and other capital market services such as asset management and online broking. We will tie up with brokers.” 

To strengthen its capital base, the bank has asked for capital infusion from the government, that currently holds 61% of the bank’s equity. Depending on the amount of capital support that the government will offer, the bank plans to raise more capital through QIP. “The whole idea is to maintain the government share in the bank’s equity capital at 61%,” said Mr Narendran. 

The bank has an approval to raise MYNs to fund its overseas business. Of this, it will raise $500 million by March 2011.