Indian Overseas Bank shares down 3% on RBI move

Mumbai: Shares of Indian Overseas Bank fell by nearly 3 percent following the RBI announcing restrictions on the firm and taking "prompt corrective action" with the view to improve internal processes to deal with mounting non- performing assets.

The stock lost 2.27 percent to Rs 36.50 on BSE.

At NSE, shares of the company declined by 2.93 percent to Rs 36.35.

"The RBI has initiated a prompt corrective action on the bank and that this action will not have any material impact on the growth prospects or performance of the bank," IOB had said in a regulatory filing yesterday.

The RBI has specified certain regulatory trigger points, as a part of prompt corrective action (PCA) framework, in terms of three parameters -- capital to risk weighted assets ratio (CRAR), net NPA and Return on Assets (RoA), for initiation of certain structured and discretionary actions in respect of banks hitting such trigger points.

Gross NPA of the bank rose to 9.40 percent for the quarter ended June 30.

IOB's gross non-performing assets rose to 8.30 percent at the end of March 31, from 4.84 percent a year ago, according to the provisional RBI data taking into account domestic operations of banks.