Indian Overseas Bank - History

History

Pre-World War II

In 1937, Thiru.M. Ct. Chidambaram Chettiyar establishes the Indian Overseas Bank (IOB) to encourage overseas banking and foreign exchange operations. IOB started up simultaneously at three branches, one each in Karaikudi, Madras (Chennai) and Rangoon (Yangon). It then quickly opened a branch in Penang and another in Singapore. The bank served the Nattukottai Chettiars, who were a mercantile class that at the time had spread from Chettinad in Tamil Nadu state to Ceylon (Sri Lanka), Burma (Myanmar), Malaya, Singapore, Java, Sumatra, and Saigon. As a result, from the beginning IOB specialized in foreign exchange and overseas banking (see below).

After World War II

In the 1960s, the banking sector in India was consolidating by the merger of weak private sector banks with the stronger ones; IOB absorbed five banks, including Kulitali Bank (est. 1933). Then in 1969 the Government of India nationalized IOB. At one point, probably before nationalization, IOB had twenty of its eighty branches located overseas. After nationalization it, like all the nationalized banks, turned inward, emphasizing the opening of branches in rural India.

In 1988-89, IOB acquired Bank of Tamil Nadu in a rescue.

The new millennium

In 2000, IOB engaged in an initial public offering (IPO) that brought the government's share in the bank's equity down to 75%. In 2001 it acquired the Mumbai-based Adarsha Janata Sahakari Bank, which gave it a branch in Mumbai. Then in 2009 IOB took over Shree Suvarna Sahakari Bank, which was founded in 1969 and had its head office in Pune. Shree Suvarna Sahakari Bank has been in administration since 2006. It had nine branches in Pune, two in Mumbai and one in Shirpur. The total employee strength was estimated to be little over 100.

International expansion

As mentioned above, IOB was international from its inception with branches in Rangoon, Penang, and Singapore. In 1941, IOB opened a branch in Malaya that presumably closed almost immediately because of the war.

In 1946, after the War, IOB opened a branch in Ceylon. More overseas branches followed quickly. In 1947, IOB opened a branch in Bangkok and re-opened others. In i948 United Commercial Bank (see below) opened a branch in Malaya. In 1949, IOB opened a branch in Bangkok.

Then in 1963, The Burmese government nationalized IOB’s branch in Rangoon. In 1973, IOB, Indian Bank and United Commercial Bank established United Asian Bank Berhad in Malaysia. (Indian Bank had been operating in Malaysia since 1941 and United Commercial Bank Limited had been operating there since 1948.) The banks set up United Asian to comply with the Banking Law in Malaysia, which prohibited foreign government banks from operating in the country. Also, IOB and six Indian private banks established Bharat Overseas Bank as a Chennai-based private bank to take over IOB's Bangkok branch.

In 1977: IOB opened a branch in Seoul. Two years later, IOB opened a Foreign Currency Banking Unit in Colombo, Sri Lanka.

International expansion slowed thereafter, for a while. In 1992 Bank of Commerce (BOC), a Malaysian bank, acquired United Asian Bank (UAB).

In the new millennium, international expansion picked up once again. In 2007, IOB took over Bharat Overseas Bank. Three years later, Malaysia awarded a commercial banking license to a locally incorporated bank to be jointly owned by Bank of Baroda, Indian Overseas Bank and Andhra Bank. The new bank, India International Bank (Malaysia), will reside in Kuala Lumpur, which has a large population of Indians. Andhra Bank will hold a 25% stake in the joint-venture, Bank of Baroda will own 40% and IOB the remaining 35%.