Indian Overseas Bank to float software subsidiary

CHENNAI - City-based Indian Overseas Bank (IOB) plans to float a banking software subsidiary to tap the Asian and African markets, the bank’s top official said Thursday.

“Our core banking solution (CBS) was developed in-house. We find there is good scope in the market for our solution. However, we have to get permission from the RBI (Reserve Bank of India) to get into a non-banking activity,” chairman and managing director M. Narendra said.

The decision to float a software subsidiary was taken when another bank approached IOB for the banking software.

“As we are not in the business of selling software, we could not sell our solution. However, we decided to take this idea to its logical end, and sought expression of interest,” M.S. Raghavan, general manager (information technology), told IANS.

He said around 16 technology companies had shown interest in partnering with the bank.

The banks’s software team comprises of 240 people, 100 of whom were recruited last year.

“Our investment in hardware is just Rs.45 crore, the lowest amongst all other Indian banks,” Raghavan added.

He said the bank would have saved around Rs.300 crore by having an in-house CBS, and this hidden value can be unlocked by floating a subsidiary.

“Our main focus is overseas markets like Bangladesh, Africa and other countries,” Raghavan said.

Many banks are mulling spinning off their software divisions, experts say. State Bank of India had recently partnered tech company Tata Consultancy Services to develop software for the financial services sector.