State-run Canara Bank may raise Rs 3,500 crore through Additional Tier-I (AT1) bonds by mid-November, people aware of the development told Moneycontrol.
“Canara Bank is planning to issue AT1 bonds by mid-November for Rs 3,500 crore,” said one person familiar with the development.
The bank’s board had on June 12 approved the capital raising plan of up to Rs 9,500 crore for FY26 through the issuance of debt instruments.
The fundraising will be conducted via Basel III-compliant bonds, split between Rs 6,000 crore in tier II bonds and Rs 3,500 crore in additional tier I (AT1) bonds. Both tranches are subject to prevailing market conditions and necessary regulatory approvals.
AT1 bonds, as these instruments are popularly known, are a type of perpetual debt instrument that banks use to augment their core equity base and comply with Basel III norms.
Read More: Canara Bank Q2 net profit rises 19%, asset quality improves
In July-September quarter, the capital adequacy ratio of the bank had declined to 16.20 percent, compared to 16.52 percent a quarter ago and 16.57 percent a year ago. The majority of the reduction was seen in the AT1 category to 2.07 percent of total CRAR in Q2FY26, from 2.64 percent a year ago. Within Tier-1 capital, there is a distinction between Common Equity Tier-1 (CET-1), which is the highest quality capital, and Additional Tier-1 (AT-1) capital, which includes instruments like AT-1 bonds.
On October 30, the lender has informed exchanges that ratings agency ICRA has assigned ‘AA+’ ratings with ‘Stable’ outlook for the Basel-III compliant Tier-1 bonds.
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