Indian Overseas Bank to raise more Funds, Employees may be offered Stocks

Indian Overseas Bank (IOB) has announced that its board will meet on Friday, May 2, 2025, in Chennai to discuss plans to raise funds for the financial year 2025-26.

The meeting will focus on exploring different options for raising capital, including issuing equity shares through a Follow-On Public Offer (FPO), Rights Issue, Qualified Institutional Placement (QIP), or Preferential Issue.

Other methods, such as the Employee Stock Purchase Scheme (ESPS) or a combination of these, could also be considered. Additionally, the bank may look into issuing Basel III-compliant Tier II bonds or other types of securities, depending on regulatory approvals and the applicable laws.

Indian Overseas Bank provides banking and financial services, and has shown strong financial growth in the recent quarter. For Q3 of FY25, the bank reported a 20.9% increase in standalone net profit, reaching Rs 873.66 crore, compared to Rs 722.56 crore in Q3 of FY24. The total income for the same quarter grew by 13.1% year-on-year, reaching Rs 1,297.53 crore.

However, despite the positive financial results, the bank’s stock saw a slight decline of 3.06%, closing at Rs 37.43 on the Bombay Stock Exchange (BSE).

What is Employee Stock Purchase Scheme (ESPS)?

The Employee Stock Purchase Scheme (ESPS) is a program where a company offers its shares to employees, usually at a price lower than the market price.
In simple words, the company gives employees a chance to buy its shares easily and cheaply.

It’s like a special sale only for employees, where they can become part-owners of the company.

Main Features of ESPS:

1. Discounted Price:

Employees usually get the shares at a discount compared to the market price.

Example: If the share price in the market is ₹100, the company might offer it at ₹85.

2. Immediate Ownership:

Once the employees buy the shares under ESPS, they own the shares immediately.

3. No Waiting (Vesting) Period:

Unlike other stock schemes like ESOPs (Employee Stock Option Plans), in ESPS there is usually no waiting period.

Employees don’t need to wait years to get the shares; they get them when they pay for them.

4. Company Raises Funds:

When employees buy shares, the company also receives money, which helps in raising capital for business activities.