Indian Overseas Bank: Revival Plan

Case Code: BSTR502
Case Length: 16 Pages
Period: 1955-2015
Pub Date: 2016
Teaching Note: Available

Price: Rs.400
Organization : Indian Overseas Bank
Industry :Banking
Countries : India
Themes: --

Abstract Case Intro 1 Case Intro 2 Excerpts

Introduction

In late 2015, India’s central banking institution, the Reserve Bank of India (RBI), took Prompt Corrective Action (PCA) against state-run Indian Overseas Bank (IOB). Three operational parameters had brought IOB on RBI’s radar; Capital to risk weighted assets ratio (CRAR), also called the Capital Adequacy Ratio (CAR) %; Net Non Performing Assets (NPA); and Return on Assets (RoA). (Refer to Exhibit I for more about CRAR, NPA, and RoA).

RBI, as a regulatory body, had specified certain trigger points for taking corrective actions. It initiated PCA if CAR went below 9%, NPA went above 10%, and RoA went below 0.25%. (Refer to Exhibit II for RBI’s PCA Framework).....

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