State-owned Canara Bank on Thursday announced plans to raise up to Rs 4,500 crore through Basel III-compliant Additional Tier 1 (AT-1) bonds as it looks to strengthen its capital position and create additional headroom for business expansion.
The proposed issuance forms part of a broader capital-raising programme approved by the bank’s Board of Directors. Under the plan, Canara Bank has been authorised to raise up to Rs 4,500 crore through AT-1 bonds and another Rs 4,000 crore through Tier 2 bonds. The AT-1 securities will be perpetual debt instruments carrying a call option after five years, subject to regulatory approval.
Coupon seen at 7.85-7.90%
The proposed bond offering is expected to attract significant investor interest, with market expectations placing the coupon rate in the range of 7.85 per cent to 7.90 per cent. AT-1 bonds are instruments used by banks to bolster their core capital and meet regulatory capital requirements under the Basel III framework.
The fundraising comes as Canara Bank continues to record growth across major business segments. The lender said it was on track to achieve an overall business size of Rs 30 lakh crore, supported by continued expansion in deposits and advances across retail, agriculture, micro, small and medium enterprises, and corporate banking.
The additional capital raised through AT-1 securities is expected to give the bank greater capacity to support credit growth while maintaining adequate capital buffers and financial resilience.
FCNR(B) mobilisation reaches $5.8 billion
Canara Bank also highlighted its performance under the Reserve Bank of India’s recently announced FCNR(B) swap facility, saying it had mobilised $5.80 billion. The lender said the mobilisation reflected its extensive domestic and international presence as well as continued customer confidence.
Foreign Currency Non-Resident Bank, or FCNR(B), deposits allow non-resident Indians to maintain term deposits in designated foreign currencies, insulating depositors from fluctuations in the rupee.
The bank said the proposed AT-1 issuance would further reinforce its capital position at a time when its balance sheet and business volumes are expanding. The fundraising will provide additional capacity to finance growth while helping Canara Bank maintain a strong capital base as it moves towards the Rs 30-lakh-crore business milestone.