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Informist, Tuesday, Nov. 18, 2025

 

--Sources: Canara Bank to raise up to INR 35 bln via tier-I bond issue on Nov 25 

 

By Vaishali Tyagi

 

MUMBAI – State-owned Canara Bank will raise funds through Basel-III compliant additional tier-1 bonds on Nov. 25, sources in the know told Informist. This will be the first perpetual bond issued by the state-owned lender in the current financial year. The bank will raise up to INR 35.00 billion through perpetual bonds, one of the sources said. The issuance will have a base size of INR 15.00 billion and a greenshoe option of INR 20 billion, according to the sources.

 

In June, the bank's board had approved raising INR 95 billion in 2025-26 (Apr-Mar), of which INR 35 billion was through additional tier-1 bonds and INR 60 billion through tier-II bonds. The lender's Basel-III capital adequacy ratio was 16.20% as of Sept. 30. So far in FY26, Canara Bank has not raised any funds through corporate bonds. 

 

According to a source closely involved in the transaction, the bank will have an option to call back the bond in five years from the date of the allotment. The bonds will be alloted two days after the date of bidding and are proposed to be listed on National Stock Exchange. Merchant bankers expect the coupon on Canara Bank's tier-I bonds to be set around 7.60-7.65%. The bank's bonds are rated 'AA+' by CARE Ratings. 

 

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 also raised INR 40 billion through 10-year tier-II bonds at a coupon of 7.46%

 

So far in FY26, banks largely remained absent from the corporate bond market with very few issuance recorded. Among key issuers, only State Bank of India raised INR 75 billion through the issuance of 10-year Basel-III-compliant tier-II bonds maturing on Oct. 20, 2035, at a coupon of 6.93%. The issuance was fully subscribed, marking a rare deal in an otherwise quiet market barring small issuances by small finance banks.

 

Merchant bankers say other large public-sector banks are also evaluating plans to tap the bond market in the coming months. In Jul-Sept, the bank had reported a 19% on-year rise in its net profit to INR 47.74 billion. Shares of the bank ended nearly flat at INR 149 on NSE.  End

 

Edited by Akul Nishant Akhoury

 

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