Canara Bank’s ₹95 Billion Bond Move: Strengthening Capital for Growth

Canara Bank has announced plans to raise ₹95 billion through a combination of Additional Tier I (AT1) and Tier II bonds, reinforcing its capital base and ensuring compliance with Basel III norms. The bank will issue ₹35 billion in AT1 bonds, which are perpetual in nature, and ₹60 billion in Tier II bonds, which have a fixed maturity period.

 

The capital infusion is aimed at enhancing the bank’s risk-absorbing capacity, supporting its credit expansion, and maintaining financial stability. The AT1 bonds, known for their loss-absorbing features, will help Canara Bank strengthen its core capital, while the Tier II bonds will contribute to its overall capital adequacy ratio.

 

Market analysts anticipate strong investor interest, given Canara Bank’s AAA/Stable credit rating and the robust demand for high-yield banking instruments. The bank has previously raised ₹3,000 crore through Tier I bonds in August 2024, demonstrating its successful track record in capital markets.

 

With India’s banking sector witnessing increased lending activity, Canara Bank’s move aligns with its growth strategy, ensuring adequate liquidity to support corporate and retail lending. Investors will be closely watching the pricing and subscription levels of these bonds as the issuance progresses.

 

Sources: Economic Times, Outlook Money