Canara Bank to raise up to ₹9,500 crore capital through bond issuance

The capital raising initiative is aimed at strengthening the bank's capital adequacy, supporting future business growth and ensuring compliance with Basel III norms

Canara Bank’s Board of Directors, at its meeting held on 12 June 2025, approved a capital raising plan for the financial year 2025–26, amounting to up to ₹9,500 crore.

 

The capital will be raised through the issuance of debt instruments, specifically Basel III-compliant Additional Tier I (AT1) and Tier II bonds. The initiative is aimed at strengthening the bank’s capital adequacy, supporting future business growth and ensuring compliance with Basel III norms.

 

As part of the plan, the bank will raise up to ₹3,500 crore through AT1 bonds during the financial year, subject to market conditions and necessary approvals. AT1 bonds are unsecured, perpetual debt instruments issued by banks under the Basel III framework. These bonds carry no fixed maturity and offer higher yields, with provisions allowing coupon payment cancellation and principal write-down or conversion into equity if the bank’s capital falls below a set threshold. 

 

In addition, the bank will raise up to ₹6,000 crore through the issuance of Basel III-compliant Tier II bonds, also subject to market conditions and regulatory approvals. Tier II bonds are debt instruments with a minimum maturity of five years and are used to enhance a bank’s total capital. Unlike AT1 bonds, Tier II bonds do not allow interest deferral if the bank remains solvent and profitable.

 

Basel III is a global regulatory framework developed by the Basel Committee on Banking Supervision following the 2008 financial crisis. It mandates that banks maintain a minimum Common Equity Tier 1 (CET1) capital ratio of 4.5 per cent of risk-weighted assets (RWAs), with total Tier 1 capital (CET1 + AT1) at a minimum of 6 per cent and total capital (Tier 1 + Tier 2) at a minimum of 8 per cent.

 

Earlier this calendar year, Canara Bank had raised ₹4,000 crore at a coupon rate of 7.46 per cent. Additionally, Can Fin Homes had raised ₹1,510 crore at a coupon rate of 8.20 per cent through bonds maturing in May 2027.