Canara Bank to raise Rs 1,500 cr by next week

Bank will also get Rs 570-cr additional capital from govt by March-end

Bengaluru-based public sector lender Canara Bank on Wednesday said it will close the bond programme to raise Rs 1,500 crore by next week.

The bank is in the market to raise additional tier-I capital amounting to Rs 1,500 crore from issue of Basel-III compliant perpetual bonds by way of private placement, said V S Krishna Kumar, executive director holding additional charge of managing director & chief executive officer.

“We are already in the market with the bond issue and will close the programme next week. We are also getting Rs 570 crore from the government as part of capital infusion plan. With about Rs 2,100 crore from government and the market our business expansion will be taken care of during the next year,” Kumar told reporters after launching three new cards in association with Mastercard, here on Wednesday.

The bond issue, opened on February 16, carries a coupon rate of 9.55 per cent and would close on March 5. After the issue, the bank's tier-I capital would go up to 7.9 per cent from the current level of 7.23 per cent, he said.

Finance Minister Arun Jaitley had earlier said banks required around Rs 240,000 crore by 2018 to meet Basel-III norms and the government would infuse capital to the banks.

In addition, the bank is also planning to raise another Rs 3,000 crore through a qualified institutional placement (QIP) issue during the first quarter of next financial year, Kumar said. The bank has taken all required permissions for the issue, he added.

Canara Bank saw a growth of 8.5 per cent in its credit for the quarter-ended December 2014. The bank expects to grow this in line with the market trends for the full year-ending this March. The annual credit growth is pegged around 10.5 per cent, he added.