Canara Bank To Raise Rs 4,000 Crore Through Basel III-Compliant Tier-II Bonds

Canara Bank on March 13, 2025, announced its plans to raise up to Rs 4,000 crore through Basel III-compliant tier-II bonds. The bonds will have a 10-year tenure with a five-year call option and have been rated AAA/Stable by Crisil and CARE, the bank said in an official release.  

This capital-raising initiative is part of Canara Bank’s broader strategy for the fiscal year 2024-25 to enhance its risk-absorbing capacity while ensuring compliance with Basel III norms. The bank’s Board of Directors had earlier approved raising Rs 4,000 crore through additional tier-I bonds and Rs 4,500 crore through tier-II bonds. Additionally, in August 2024, Canara Bank had successfully raised Rs 3,000 crore through tier-I bonds.

The bidding for these tier-II bonds is scheduled to take place on March 17, 2025, through the NSE Electronic Bidding Platform (EBP).

According to the release, market analysts have anticipated strong demand given the bank’s robust credit rating and the stability of public sector banks in India.  

Purpose of Basel III-Compliant Bond 

Basel III-compliant bonds are supposed to improve a bank’s resilience by ensuring adequate capital buffers. Tier-II bonds, in particular, contribute to the overall capital adequacy ratio, which is crucial for sustaining lending activities and maintaining financial stability. By securing funds through this route, Canara Bank aims to strengthen its balance sheet and sustain its growth trajectory. 

Canara Bank had earlier this year recorded a 12.25 per cent rise in its standalone net profit for the third quarter of the financial year 2024-25 (FY25), reaching Rs 4,104.20 crore. The bank also reported that its total income rose to Rs 36,113.77 crore in Q3 FY25, a 12 per cent increase when compared to Rs 32,333.93 crore year-on-year (y-o-y) basis. 

Even though the bank’s interest income increased from Rs 28,038.83 crore to Rs 30,311.61 crore, net interest income (NII), a metric used to assess the difference between interest earned and interest expended, fell by 2.85 per cent to Rs 9,148.57 crore from Rs 9,417 crore in Q3 FY24.