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The Indian Overseas Bank (IOB) was founded on February 10, 1937, by M. Ct. M. Chidambaram Chettiar, with the specific purpose of promoting overseas banking and foreign exchange operations. Its initial business strategy was unique for the time, as it simultaneously opened branches in Karaikudi, Madras (Chennai), and Rangoon (Yangon), demonstrating an immediate focus on an international network. The bank was established primarily to serve the Nattukottai Chettiars, a mercantile class with extensive trading interests across Southeast Asia, including Burma, Malaya, and Singapore, which quickly led to additional overseas branches in Penang and Singapore. The institution's early expansion was cut short by the political changes of World War II, but it continued to grow both domestically and abroad in the post-war era, until it was nationalized by the Government of India in 1969 alongside 13 other major banks.

IOB is currently a Public Sector Bank (PSB) with its shares listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The bank's majority ownership is held by the Government of India, which owns approximately 94.61% of the total equity as of the latest data. As one of the largest public sector banks, IOB maintains a significant presence in the Indian financial system with a large network of domestic branches and a historical international footprint in countries like Singapore and Hong Kong. Its significance is tied to its role in financial inclusion, government initiatives, and a continued focus on sectors like agriculture and MSMEs, demonstrating its commitment to national economic development as a major state-owned financial institution.