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Informist, Tuesday, Aug. 26, 2025

 

By Priyasmita Dutta

 

MUMBAI – State-owned Canara Bank is planning to tap the market to raise INR 10 billion to INR 15 billion through additional tier-1 bonds in the current quarter ending September, its Executive Director S.K. Majumdar said Tuesday. "We are discussing the matter, we will definitely raise funds by September to maintain our capital," Majumdar told Informist on the sidelines of FIBAC 2025, organised by the Federation of Indian Chambers of Commerce and Industry and the Indian Banks Association. 

 

The bank's board has approved raising INR 95 billion in 2025-26 (Apr-Mar), of which INR 35 billion is through additional tier-1 bonds and INR 60 billion is through tier-II bonds. Canara Bank will raise INR 35 billion through tier-1 bonds in two to three tranches, Majumdar said, adding that the bank is "not too keen" on tier-II bonds. 

 

The public-sector bank's capital adequacy ratio based on Basel III norms was 16.52% at the end of June. "We have some repayments coming up during this quarter, so the fundraising will help us maintain our capital at the current levels, which is comfortable for us," Majumdar said. 

 

Additional tier-I bonds are popular instruments for banks to raise quasi-equity capital, especially for larger public sector and private sector banks. Canara Bank last issued tier-I bonds in August last year, when it raised INR 30 billion at a coupon of 8.27%. In March, the bank had also raised INR 40 billion through 10-year tier-II bonds at a coupon of 7.46%. 

 

A healthy capital base will also help the bank to boost its credit growth, Majumdar said. Canara Bank Managing Director and Chief Executive Officer K. Satyanarayana Raju had said last month that the bank's credit growth is expected to be strong in the rest of FY26, with credit growth not to be less than 12% in the next three quarters. The bank is aiming for a 14-15% growth in its retail, agriculture, and micro, small, and medium enterprises loan portfolio, Raju had said.

 

Canara Bank's global advances and deposits had risen over 12% and nearly 10%, respectively, at the end of the June quarter. The bank expects global advances to rise 10-11% on year by the end of FY26 and global deposits to rise 9-10%.

 

On Tuesday, shares of the bank ended at INR 106.01 on the National Stock Exchange, down 2.6% from the previous close.  End

 

Edited by Saji George Titus

 

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