Canara Bank gets shareholders nod to raise up to Rs 2,000 crore

The bank said separately that, RBI has imposed a penalty of Rs 2 crore on it for violation of anti-money laundering norms

Canara Bank on Wednesday said it has got shareholders' approval to raise capital by up to Rs 2,000 crore.

"The bank has concluded its 14th Annual General Meeting and transacted... Raising of capital up to Rs 2,000 crore by further issue of equity/preference shares or other securities either by way of follow-on public issue, rights issue, private placement, Qualified Institutional placement (QIP), or any other mode," Canara Bank said in a BSE filing.

If further said: "The resolution was passed with requisite majority."

In a separate filing, Canara Bank said Reserve Bank of India (RBI) has imposed a penalty of Rs 2 crore on it for violation of anti-money laundering norms.

Last month, Canara Bank had said it will seek shareholders' approval in July to raise Rs 2,000 crore to create capital buffer.

"The issue proceeds will enable the bank to strengthen its capital adequacy requirements as specified by RBI from time to time," the bank had said.

The state-owned lender's capital adequacy ratio, as on March 31, 2016, stood at 11.08 per cent, and was well above the 9 per cent stipulated by the RBI.

CAR is a measure of a bank's capital to cushion against or absorb a reasonable amount of losses before they become insolvent and consequently lose depositors' funds. It ensures efficiency and stability of a financial system by lowering the risk of banks becoming insolvent.

Shares of Canara Bank were trading 1.36 per cent up at Rs 261.25 on BSE.