Canara Bank Plans Rs 3500 Crore AT1 Bond Issuance to Strengthen Capital Base in November 2025

Canara Bank is set to raise Rs. 3500 crore through Additional Tier-1 (AT1) bonds, marking the first such issuance by any bank in the current fiscal year. This move aims to strengthen its capital base and support future growth. The bond issue is scheduled for November 28, 2025, on the NSE's Electronic Bidding platform.

The bank's AT1 bond issuance is part of a larger capital raising strategy of up to Rs. 9500 crore for the year. This strategy includes both Tier-1 and Tier-2 instruments to enhance regulatory capital ratios under Basel III norms. Canara Bank's statement highlighted this comprehensive approach to bolster its financial standing.

In response to strong investor interest, Canara Bank has structured the bond issue with a base component of Rs. 1000 crore and a green shoe option of Rs. 2500 crore. This issuance signifies a notable reopening of the Tier-1 segment after a prolonged period of inactivity in the domestic market.

Recent regulatory changes by Canara Bank include adjustments to its Marginal Cost of Funds Based Lending Rate (MCLR), effective from November 12, 2025. The one-year MCLR has been reduced from 8.75% to 8.70%, reflecting minor cuts across various tenors.

Significant management changes were announced by Canara Bank, with Shri Sunil Kumar Chugh set to become Executive Director on November 24, 2025. Chugh brings over three decades of experience in public sector banks, enhancing leadership and credit management capabilities at Canara Bank.

The Reserve Bank of India imposed a monetary penalty of Rs 4,35,550 on Canara Bank due to deficiencies found in its currency chest during an October 2025 inspection. Despite this penalty, the bank stated that its operations remain largely unaffected.

Credit Ratings and Financial Performance

On November 6, 2025, Care Ratings Limited reaffirmed multiple credit ratings for Canara Bank's bond instruments. The proposed Rs 3,500 crore Tier I bonds received a CARE AA+ (Stable) rating, while existing Infrastructure Bonds worth Rs 20,000 crore and Tier II Bonds totalling Rs 7,250 crore retained a CARE AAA (Stable) rating.

The ratings reflect Canara Bank's robust franchise and majority ownership by the Government of India (62.93% as of September 30, 2025). The bank boasts a vast network of 9,948 branches and strong capitalization with a CAR of 16.20% and CET I ratio of 12.21%.

Asset Quality and Liquidity Position

As reported by CareEdge on September 30, 2025, Canara Bank showed improvements in asset quality with a high provision coverage ratio of 93.59%. The Gross NPA ratio stood at 2.35%, while Net NPA was at 0.54%. These figures indicate positive trends in managing non-performing assets.

The bank maintains a healthy liquidity position supported by excellent LCR and NSFR levels, significant SLR buffers, and a relatively low CASA ratio of 28.02%. These factors contribute to Canara Bank's overall financial stability and operational efficiency.

Canara Bank's consistent profitability is evident from its net profit figures: Rs 17,027 crore in FY25 and Rs 9,526 crore in H1FY26. These results underscore the bank's ability to generate sustainable earnings while maintaining strong financial health.