Talking on the decision by the bank, Indian Bank Chairman and Managing Director T M Bhasin commented that the bank has not yet decided its quantum. The guidelines of the securities and Exchange Board of India would be basic while deciding the quantum. Further, recalling Tier-II that happened to be costly, Bhasin added that the funds would augment Tier-1 capital.
Raising the funds through FPO would help the bank to gain Rs 3,000 crore as additional capital for Tier-I capital. The FPO, however, needs to be paired with some scaled-back profit. The entire decision would end up with helping the bank increase its loan book by Rs 20,000-25,000 crore. Although, as an alternative, the bank had an option of raising Rs 6,000 crore through Tier-II, analyzing the alternative to be more expensive, the bank decided to file FPO.