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Finsamudra Desk

Canara Bank Raises ₹2,042 Crore via Basel III AT1 Bonds at 8.10% Coupon; Attracts 111 Bids

The private placement offering, carried out via the National Stock Exchange’s (NSE) electronic bidding platform (EBP) on September 16, 2026, witnessed healthy institutional participation, logging 111 bids across mutual funds, pension funds, insurance firms, and corporate treasury desks.

₹2,042 CRORE111 Bids

Banking2 min read

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Issue Structure, Green-Shoe Exercise & Pricing

Canara Bank entered the market with a base issue size of ₹2,000 Crore, while retaining a green-shoe option of ₹42 Crore to accommodate surplus institutional demand. Following broad-based bidding, the lender exercised the green-shoe option in full, taking the aggregate issuance size to ₹2,042 Crore.

The bonds carry a fixed coupon rate of 8.10% per annum, payable annually. The debt instruments are rated, listed, unsecured, subordinated, non-convertible perpetual bonds with a face value of ₹1 Crore each.

The deemed date of allotment and pay-in has been scheduled for September 18, 2026, with the debt securities slated to be listed on the Wholesale Debt Market (WDM) segment of the National Stock Exchange of India (NSE) in compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Key Terms of Canara Bank AT1 Bond Issuance

ParameterDetails

Issuer

Canara Bank

Instrument Type

Basel III-Compliant Additional Tier 1 (AT1) Bonds

Total Amount Raised

₹2,042 Crore

Base Issue Size

₹2,000 Crore

Green-Shoe Retention

₹42 Crore

Coupon Rate

8.10% per annum (Fixed)

Face Value

₹1 Crore per Bond

Tenor

Perpetual

Issuer Call Option Date

September 18, 2031 (and each anniversary thereafter)

Deemed Allotment / Pay-in Date

September 18, 2026

Total Bids Logged

111 Bids

Listing Exchange

National Stock Exchange (NSE)

Perpetual Nature and 5-Year Call Option Dynamics

Under Basel III norms, Additional Tier 1 instruments do not have a defined maturity date (perpetual tenor) and lack put options for investors. However, they incorporate an issuer call option.

Canara Bank retains the right to redeem the bonds on September 18, 2031—marking the exact fifth anniversary from the deemed date of allotment—or on any subsequent annual coupon payment date, subject to prior regulatory approval from the Reserve Bank of India (RBI).

In the Indian debt capital markets, top-tier PSU banks typically exercise call options on AT1 bonds at the five-year mark, provided market refinancing rates remain favorable.


Why it matters

Strategic Significance for Canara Bank's Balance Sheet

The ₹2,042 Crore capital infusion is slated to augment Canara Bank's Tier-1 Capital Adequacy Ratio (CAR), providing critical balance sheet headroom amid robust double-digit credit growth in India's banking sector.

  1. Capital Adequacy Reinforcement: The issuance provides non-dilutive capital to absorb incremental risk-weighted assets (RWAs) across corporate and retail lending books.
  2. Cost-Efficient Capital: At an 8.10% coupon, the pricing represents an attractive spread over comparable benchmark sovereign yields, underscoring the market's faith in the PSU bank’s asset quality and earnings momentum.
  3. Institutional Liquidity Deployment: The 111 bids underline sustained domestic institutional demand for high-grade quasi-sovereign paper offering predictable yields above 8%.

With allotment formalities concluding on September 18, 2026, the listing will further enhance liquidity and secondary market price discovery on the NSE debt platform.

More on Canara Bank

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Sources

Finsamudra Desk17 Sept 2026, 1:22 pm IST
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