UPDATE 1-Indian Overseas Bank in talks for 7-bln-rupee bonds

MUMBAI, Aug 26 (Reuters) - State-run Indian Overseas Bank (IOBK.BO: Quote, Profile, Research) is in talks with state-run insurer Life Insurance Corp of India to sell bonds up to 7 billion rupees, a bank official said on Tuesday. "We are in talks with them to sell upper Tier-II bonds. The bonds will have a 15-year maturity, with call option at the end of the 10th year," said the official, who did not want to be named.

"We are discussing the coupon rate," he added.

The bank's board on Tuesday ratified the upper Tier-II bond issue, it said in a notice to the National Stock Exchange.

Indian Overseas Bank had raised 3 billion rupees through an issue of subordinated bonds to investors last week. (Reporting by Anurag Joshi; Editing by Prem Udayabhanu)