Indian Overseas Bank (IOB) is a significant bank with 1,400 branches in India and six branches overseas. Established in 1937 and headquartered in Chennai (formerly Madras), IOB has its own ISO certified Information Technology department. This department has developed software for online banking services, which is used by 900 branches. By the end of the financial year 2007-08, IOB aims to expand online banking to 1,200 branches. Additionally, IOB operates approximately 500 ATMs throughout India and its International VISA Debit Card can be utilized at all ATMs belonging to the Cash Tree and NFS networks.
The Govt. of India has approved IOB as one of the banks for online tax payment. IOB also provides internet banking, known as E-See Banking.
History
Shri. M. Ct. M. Chidambaram Chettyar established the Indian Overseas Bank (IOB) in 1937 to promote overseas banking and foreign exchange operations. IOB was launched simultaneously at three branches: Karaikudi, Madras (Chennai), and Rangoon (Yangon). Soon after, the bank opened additional branches in Penang and Singapore. Its clientele primarily consisted of the Nattukottai Chettiars, a merchant class that had expanded from Chettinad in Tamil Nadu state to various locations including Ceylon (Sri Lanka), Burma (Myanmar), Malaya, Singapore, Java, Sumatra, and Saigon.
From the outset, IOB focused on foreign exchange and overseas banking (see below).
In the 1960s, the consolidation of India’s banking sector occurred by merging weak private sector banks with stronger ones. IOB participated in this process by incorporating multiple banks, including Kulitali Bank which was founded in 1933.
Before being nationalized in 1969 by the Government of India, IOB had twenty out of its eighty branches situated overseas. The nationalization resulted in a shift towards focusing on rural India and expanding branch networks in those areas.
IOB acquired Bank of Tamil Nadu in a rescue operation during the years 1988-89. Furthermore, in the year 2000, IOB successfully carried out an IPO that resulted in a decrease of the government’s equity share in the bank to 75%. Apart from these developments, the bank also underwent international expansion.
In 1937-38, as mentioned earlier, the IOB set up branches in Rangoon, Penang, and Singapore.
IOB established a branch in Malaya in 1941, but it is suspected that the branch ceased operations shortly after due to the war.
IOB established a branch in Ceylon in 1946.
IOB opened a branch in Bangkok in 1947 and also reopened other branches. In the following year, United Commercial Bank established a branch in Malaya.
IOB opened a branch in Bangkok in 1949, but the Burmese government took control of IOB’s Rangoon branch in 1963.
In 1973, United Asian Bank Berhad was established in Malaysia by IOB, Indian Bank, and United Commercial Bank (UCB). Both IOB and UCB had been operating in Malaysia since 1941 and 1948 respectively. The purpose of establishing United Asian Bank was to comply with Malaysia’s Banking Law, which prohibited foreign government banks from operating in the country. Additionally, IOB and six Indian private banks formed Bharat Overseas Bank to take over IOB’s Bangkok branch. In 1977, IOB also opened a branch in Seoul.
In 1979, IOB set up a Foreign Currency Banking Unit in Colombo, Sri Lanka.
Bank of Commerce (BOC), a Malaysian bank, acquired United Asian Bank (UAB) in 1992.
Bank of Commerce (BOC) and Bank Bumiputra Malaysia merged in 1999 to create Bumiputra-Commerce Bank (BCB) Berhad.
In 2005, BCB merged with CIMB which is owned by Datuk Seri Nazir Razak, the youngest son of Malaysia’s former Prime Minister Tun Abdul Razak. Tun Abdul Razak served as prime minister from 1970 to 1976. Nazir Razak is also the younger brother of Dato Seri Najib Tun Razak, who was the deputy prime minister in 2005.
In 2007, IOB acquired Bharat Overseas Bank.
Company background
One public sector bank that has experienced a significant improvement in asset quality is Indian Overseas Bank (IOB). Established in 1937, IOB focused on foreign exchange and overseas banking. Despite facing the challenge of non-performing assets (NPA), IOB has effectively managed the problem. The bank has a wide network of 1,457 branches and 165 ATMs, contributing to its positive growth prospects.
The bank is not a major player in the retail market and has recently started focusing more on retail lending. Additionally, the bank has the authority to collect Government revenue, which contributes to its fee income. The business of IOB has been performing well in terms of credit and deposits. In particular, the outstanding amount for home loans has increased by 60% year on year in 2004. Moreover, the bank is one of the few that successfully meets the targets for priority and agricultural lending. In terms of industry background, the Indian banking sector has undergone significant changes in the past decade due to ongoing reforms.
Over time, the industry has improved efficiency by implementing prudential norms for asset classification and focusing more on technological advancements. Despite this, public sector banks (PSBs) still dominate the market, representing 75% of market share and profits. However, new private sector banks are rapidly catching up to PSBs with their technology-focused business models. Treasury profits have significantly increased in the past two years for banks. With rising interest rates, banks need to prioritize growth in core profitability.
The banks’ balance sheet has been retailised, resulting in an improved asset mix that includes home loans, auto loans, and personal loans.
Products/services Of Indian Overseas Bank
Credit Cards
The IOB Visa Credit Card is a convenient alternative to cash or checks and can be used internationally. You have the option to withdraw up to 40% of your assigned limit as cash. IOB has partnered with United India Assurance Co. Ltd. to provide you with complimentary insurance coverage if you use the card at least once every quarter.
Home Loan
Indian overseas bank offers various home loan schemes, including the home improvement scheme for salaried individuals with confirmed service. This loan can be used for repairing, renovating, upgrading, and making modifications to your home.
Another scheme provided by Indian overseas bank is the home decor scheme, which allows you to furnish your home. To apply for this loan, you must be employed with at least 3 years of confirmed service and own a home.
Even NRIs have the opportunity to obtain a home loan from Indian overseas bank for purchasing, building, or renovating a home. However, it is important to note that the house or flat should be used for your own occupation upon returning to India.
