How Indian Overseas Bank is trying to mislead with an ad
R Ramanathan 19 February 2014

Indian Overseas Bank published an ad with a header “Performing Consistently, Growing Exponentially” while releasing its December quarter results. Only growth the Bank has shown in past five quarters is in bad loans

The slowdown observed in the manufacturing and service sectors has affected the entire economy very badly.  This has given very worst impact to the banking sector, especially public sector banks. Most of the public sector banks have delivered bad results quarter after quarter during this year. They are saddled with surging bad loans and huge provisions to meet the bad loans.  This trend may continue till we witness visible recovery on the overall economy. 


On 31 January 2014, I saw December quarter results of Indian Overseas Bank, published in the Hindu Business Line with the following header…

“Performing Consistently, Growing Exponentially”


I was really surprised to see such headline from the Bank as their financial results for the past five quarters were not encouraging at all. The ultimate performance of any entity or bank is measured by the profit generated by that entity.  Among all indicators, increasing profitability depends upon the following parameters…

  1. Low cost deposits
  2. Selection of good borrowers
  3. Non-fund based income and other income
  4. Low level of bad loans and provisions
  5. Robust follow-up mechanism of the Bank on their credit accounts

I furnish below the essential indicators of Indian Overseas Bank for the past five quarters.

                                                                                  Rupees in crore


Dec 2012

Mar 2013

June 2013

Sept 2013

Dec 2013

Net Profit






Gross NPA












% of Net NPA






Provisions made







The gross non-performing assets (G-NPAs) and net non-performing assets (N-NPAs) of the Bank are growing rapidly.  Net profit of the Bank is declining. The huge provisions made towards bad loans are eating away the profit of the Bank.  Bank should take strenuous efforts to arrest the above trend. 


Oriental Bank of Commerce (OBC), one among the public sector banks, has got total business of Rs3.16 lakh crore (total deposits of Rs1.82 lakh crore and total advances of Rs1.33 lakh crore from 2,089 branches). The business level of Indian overseas Bank is higher than Oriental Bank of Commerce with total business of Rs3.87 lakh crore, total deposits of Rs2.13 lakh crore and total advances of Rs1.74 lakh crore from 3,117 branches.  It is pertinent to note that Oriental Bank of Commerce has generated net profit of Rs224.30 crores for the quarter ended 31 December 2013.


On the other hand, City Union Bank, one of the scheduled commercial bank based at Kumbakonam, with 400 Branches and a total business of Rs36,941 crores, total deposits of Rs21,116 crore and total advances of Rs15,825 crore, has earned a net profit of Rs89 crores for the same quarter. 


It is to be noted that opening of more number of branches alone does not serve any purpose. There should be close follow-up action by the executives at the helm to build up business and make the branches earning sizeable income. Apart from rural branches, all other branches should break even in a couple of years. 


Had the increase in deposits and advances of Indian Overseas Bank earned substantial profit, the headline in the ad on the top of their results for the quarter ended December 2013 would become meaningful. The IOB team should create excellent results and not the ad.

Simple Indian
9 years ago
While private & public limited firms routinely cook up figures like this to woo corporate FDs at 'attractive' rates from gullible investors, such practices by PSU Banks is deplorable. After all, banking is all about trust. But, when it comes to profitability, PSU Banks in general are notorious for their extravagance (indiscriminate expansion of Branch & ATM network) and poor service levels. Most new Branches of even large Banks like the SBI aren't offering more than the basic services of S.B. A/c or a current A/c for businesses. Wooing customers with unethical practices will have a telling effect on Banks like IOB, which they will realize sooner or later.
Dayananda Kamath k
Replied to Simple Indian comment 9 years ago
chidambaram is also doing the same with the budget the trend is percolating down.
Ramesh Poapt
9 years ago
As rightly said by others,ALL PSU banks mislead by highlighting flimsy areas of better performance.If say two factors so called better mentioned, there are seven bad areas where performance has deteriorated,which is serious.Growth in advances is say 12or 15%, NPAs rise is 30 or 40 or 50%.Now where is improvement?It is clearserious deterioration!But who cares..Statutorily,this should be made mandatory...United Bank of India is critical/in ICU,financial healthwise..
Dayananda Kamath k
9 years ago
dena bank also did the same thing. corporation bank also doing it since last two quarters and i even complained to sebi also but of no avail.regarding iob it is less said better.cmd when he was manager double financed same asset under govt scheme of dri in connivance with dealer in goa for sewing machines which is already financed by another branch of the same bank. his enquiry was fasttracked to facilitate his promotion to ed.even police gave an endorsement that the criminal complaint against him and other executives of the bank is of service matter. all these matters are brought to the notice of cvc,president of india,reserve bank of india, but pormoted as ed and fasttracked to be chairman. he once used his might to provide finance to a burocrat in nigerian back to back l/c fraud. but due to timely intervention through the employee director and chairman it was avoided. hence it is no wonder that iob is the number one in amounts involved in frauds in 2013.
yesh veer arya
9 years ago
Not only Indian Overseas Bank every bank is misleading public they are highlighting only those fields I which they have some positive figures, in one quarter I analysed qr result of IOB and there was mistake and I spoken to CMD then result republished. When you will go through the AD of SBI regarding concession to women for housing,it will have very meagre effect on interest morethan amount is spent on ads,banks are spending too much amount on wastefull expenditure like ads,miscillenious there is no decrease in expenses of stationery and postage inspite of core banking banks require no sanction and have money with then so they are spending lot of money to oblise FM. There is flood of bank branches in shivganga in TN Canara bank is going to purchase 700 coins dispensing machines they will become useless when RBI will not supply coins to them. Bank.s officials will earn too much in this deal. Govt should stop appointing CMDs and EDs from other banks if Govt want to decrease NPA yesh veer arya dehradun
9 years ago
IOB is not the only Bank which is reeling under heavy NPAs. The Nation,s banker viz., SBI is not in any way inferior to IOB. It is unfair to compare the performance of nationalised banks vis a vis the Private Sector Banks. How many of the private banks stick out their necks to finance the backbone sector - viz., agriculture and Education Loans. Is not the duty of RBI to make them adhere to the norms prescribed by them to make a level playing field. Double standards of the regulator is very latent. God save this nation.
Free Helpline
Legal Credit