IOB is Transforming Fast, Eyeing Long Term Growth

With its roots tracing back to 1937, the Chennai-headquartered public sector lender, Indian Overseas Bank, recently celebrated its 89th Foundation Day. But IOB isn’t just reflecting on the past - it is boldly stepping into the future, guided by a transformative leadership under Managing Director and CEO Ajay Kumar Srivastava. Within a span of months, IOB has launched a slew of initiatives - from lowering lending rates in line with RBI cues, to introducing futuristic digital offerings, raising capital with confidence, and accelerating loan recoveries. Here’s an in-depth look at how IOB is reshaping its journey.

In a customer-friendly move, Indian Overseas Bank recently reduced its External Benchmark Lending Rate (EBLR) by 25 basis points to 8.85%, following the Reserve Bank of India’s repo rate cut to 6.00%. This drop - effective April 12, 2025 - has made IOB’s loan offerings, including housing and auto loans, more affordable to consumers. 

“This revision reflects our commitment to support economic growth by passing on the benefits of policy easing directly to our borrowers,” says MD & CEO Ajay Kumar Srivastava.

In a demonstration of growing investor faith, IOB recently raised Rs 1,436 crore through a Qualified Institutional Placement (QIP), exceeding its base target. Some of the biggest domestic institutional investors including LIC, SBI Pension Fund, & IIFL snapped up more than 62% of the offering. This strategic fundraise increased the bank’s paid-up capital and reduced the government’s stake - bringing IOB closer to meeting SEBI’s minimum public shareholding (MPS) norms. 

MD & CEO Srivastava emphasized that the capital infusion would also elevate IOB’s CRAR to over 18%, significantly boosting its resilience. Looking ahead, the bank is eyeing a second QIP in FY26, further enhancing its financial flexibility.

With infrastructure and affordable housing on the national agenda, IOB’s Board has also greenlit a Rs 10,000 crore issuance of long-term infrastructure bonds. These funds will enable IOB to participate more actively in transformative national projects while diversifying its funding base. The bonds will be issued in tranches over the current and next fiscal years, aligning with RBI guidelines and government regulations.

IOB is also actively purging its books of legacy bad loans. A marquee plan to sell 46 non-performing accounts worth Rs 11,500 crore - including high-profile names like Jet Airways, Videocon, Reliance Communication, and IL&FS Financial Services - is already underway. The bank has set a reserve price of Rs 2,290 crore, with an auction to follow.

Not stopping there, CEO Srivastava also revealed that sales of MSME and educational loan portfolios are also being explored to further optimize asset quality. This aggressive cleanup is bearing fruit. Gross NPAs dropped dramatically from 11.69% in March 2021 to just 2.72% by the end of the second quarter itself. Net NPAs are also down to 0.47% - a testament to Srivastava’s strategic oversight.

Between April and December 2024, IOB had recovered Rs 1,855 crore - nearly 31% more than the previous year. Recoveries from technically written-off accounts also surged nearly 50% year-on-year in Q3. The bank has since then been targeting Rs 2,500 crore in recoveries for Q4FY25, with key accounts under the National Company Law Tribunal (NCLT) expected to play a vital role.

The IOB team remains laser-focused on resolution and recovery. They have already recovered Rs 3,021 crore this year out of their Rs 5,500 crore annual target.

To mark its 89th Foundation Day, IOB unveiled two customer-centric digital innovations - Aadhaar-OTP based account opening and API Banking services. With the new Aadhaar eKYC facility, individuals can open accounts online with minimal documentation, subject to transaction caps as per RBI norms. 

For businesses, IOB’s Application Programming Interface (API) Banking integrates directly with corporate accounting systems, enabling real-time, seamless transactions. This move is taking the bank’s corporate services prowess from legacy banking to fintech class. These innovations aren’t just technological upgrades but customer-first solutions that make banking smarter and more secure.

Catering to India’s ever expanding segment of High Net Worth Individuals (HNIs), IOB has recently introduced an Ultra HNI Savings Scheme featuring three tailored variants - SB Prime, SB Priority, and SB Privilege. 

Their key features include, personal accident insurance cover up to Rs 1.10 crore, dedicated relationship managers, free lounge access at airports, waived processing fees on loans, complimentary debit / credit cards, and locker rent concessions. Such products are proving to be more than a savings account, but a lifestyle solution for IOB’s most discerning clients.

On the operational side, IOB has recently launched Retail Loan Processing Centres (RLPCs) across eight cities - including Chennai, Delhi, Mumbai, and Bengaluru - to speed up retail loan approvals using digital tools and advanced analytics.

IOB’s RLPCs reflect their vision of blending customer convenience with efficient risk management. These centers are set to play a major role in boosting the bank’s retail segment, while reducing turnaround times significantly.

In a nod to both modernization and tradition, IOB also inaugurated a new feature-rich ATM kiosk at Chennai Central Railway Station - emphasizing convenience while honoring a landmark that’s part of the city’s heritage.

IOB has also reaffirmed its commitment to ethical banking by taking action against entities linked to financial irregularities. A show-cause notice was recently issued to IL&FS Engineering Services following a ₹123 crore fraud finding, flagged in a forensic audit by Grant Thornton India.

The matter, stemming from the broader IL&FS crisis, is being handled under the supervision of retired Supreme Court Justice D. K. Jain. IOB’s active engagement in such high-stakes investigations underscores its zero-tolerance approach to financial malfeasance.

For the third quarter of FY25, IOB reported a robust 21% year-on-year rise in net profit to Rs 874 crore, up from Rs 723 crore. Total income surged to Rs 8,409 crore, and operating profit hit Rs 2,266 crore - up from Rs 1,780 crore the previous year. These numbers reflect strong fundamentals, rising efficiency, and the impact of digital and structural reforms led by MD & CEO Srivastava and his team.

At the core of IOB’s resurgence story is its Managing Director and CEO, Ajay Kumar Srivastava. A veteran banker with deep operational insights and strategic foresight, Srivastava’s leadership has energized the bank’s journey of modernization, accountability, and aggressive growth. Whether it's spearheading digital transformation, restoring asset quality, or expanding customer-centric offerings, his fingerprints are visible across IOB’s successful initiatives.

His inclusive leadership style, bold capital market strategies, and focus on transparency have not only restored investor confidence but also positioned IOB as a nimble public sector bank ready for the future.

From restructuring its loan book to delighting elite clients and improving bottom lines, Indian Overseas Bank is a story of revitalization. The 89-year-old bank has proven that with the right leadership, clear strategy, and tech-forward thinking, even legacy institutions can emerge as modern-day powerhouses.

As it transforms dynamically during this 90th year of operations, IOB is clearly not resting on its laurels. With Ajay Kumar Srivastava at the helm, the bank’s compass is set firmly toward sustained growth, digital evolution, and inclusive banking.