Canara Bank has announced plans to raise up to ₹3,500 crore via Basel III-compliant Additional Tier I (AT1) bonds in the current financial year, subject to market conditions and regulatory approval. This move forms part of a broader capital-raising programme — the bank’s board has approved a total fund-raise of up to ₹9,500 crore for FY 2025-26, combining ₹3,500 crore of AT1 instruments and ₹6,000 crore of Tier II bonds.

Key Highlights

• Canara Bank plans ₹3,500 crore AT1 bond issue to strengthen capital base and support future growth.
• The fundraising enhances capital adequacy, enabling Canara Bank to expand lending and meet regulatory requirements.

The primary goal is to bolster the bank’s capital base, enhance its capital adequacy ratios and maintain regulatory compliance under the Basel III norms. AT1 bonds are perpetual, unsecured debt instruments which allow the bank to absorb losses while preserving equity cushions. The timing of the issue coincides with improving credit demand and the bank’s ambition to support future growth while managing asset quality and regulatory demands.

Given that the AT1 bond market has been relatively quiet, Canara Bank’s early foray in the fiscal year could spark similar issuances by other banks. The issue is structured with a base size of ₹1,000 crore and a greenshoe option of up to ₹2,500 crore, reflecting investor demand and flexibility.

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For shareholders and market observers, this capital-raise underscores the bank’s proactive approach to strengthening its balance sheet. With reported improvements in its asset-quality metrics — such as lower GNPA and higher provision coverage — the move is aimed at enabling Canara Bank to scale lending and withstand potential headwinds.

In summary, Canara Bank is deploying AT1 and Tier II bond issuances to reinforce its capital base ahead of growth opportunities, while being mindful of regulatory norms and market sentiment.