Canara Bank , a major Indian public sector bank, has announced its decision to exercise call options on two Basel III compliant Additional Tier 1 (AT1) bonds totaling Rs 1,755 crore. This move, approved by the Reserve Bank of India (RBI) on November 7, 2025, demonstrates the bank's proactive approach to managing its capital structure.

Bond Details and Call Dates

The bank plans to call two sets of AT1 bonds:

Key Points of the Call Option Exercise

1. Timing: Both bonds have completed the minimum 5-year tenure required before the call option could be exercised.
2. Payment: The principal amounts along with accrued interest will be paid to bondholders on the respective call dates.
3. Liability Cessation: After the payment, Canara Bank's liability towards the bondholders will cease.
4. Bond Extinguishment: Following the payments, the bonds will be extinguished in the bondholders' accounts with NSDL/CDSL.

Implications for Investors

Bondholders should note the following:

• Payments will be made through RTGS/NEFT/Direct Credit to the registered bondholders as of the record date.
• The bank will consider its liability discharged upon making the interest cum principal payment.
• Investors should ensure their details with NSDL/CDSL are up to date to avoid any payment issues.

Market Context

This move by Canara Bank comes amidst a broader trend of Indian banks optimizing their capital structures. The decision to call these AT1 bonds may reflect the bank's confidence in its capital position and could potentially lead to a reassessment of its funding strategy.

For any queries regarding the call option exercise, bondholders are advised to contact KFin Technologies Limited, the Registrar and Transfer Agent for Canara Bank.

As the banking sector continues to evolve, such strategic financial decisions underscore the importance of staying informed about the terms and conditions of investments in bank capital instruments.

Canara Bank , one of India's leading public sector banks, has received robust credit ratings from CARE Ratings Limited for its various bond instruments, totaling ₹30,750 crore. The ratings reflect the bank's strong financial position and market standing.

Credit Ratings Breakdown

CARE Ratings has assigned a 'CARE AA+; Stable' rating to Canara Bank's Tier I Bonds worth ₹3,500 crore. The agency has also reaffirmed its 'CARE AAA; Stable' rating for the bank's Infrastructure Bonds worth ₹20,000 crore and Tier II Bonds worth ₹7,250 crore.

Key Strengths Highlighted

The ratings agency emphasized several key strengths of Canara Bank:

1. Established retail franchise with a strong network, especially in southern India
2. Comfortable capital adequacy levels
3. Improvement in profitability over the last three years
4. Majority ownership by the Government of India (62.93% stake)
5. Demonstrated track record of capital support from the government

Areas of Concern

While the overall outlook is positive, CARE Ratings noted a few areas of concern:

1. Relatively low Current Account and Savings Account (CASA) ratio compared to peers
2. Moderate, albeit improving, asset quality levels

Financial Performance

Canara Bank has shown robust financial performance:

• Net profit increased by approximately 17% to ₹17,027.00 crore from ₹14,554.00 crore
• Return on Total Assets (ROTA) improved marginally from 1.04% to 1.08%
• For H1, the bank reported a net profit of ₹9,526.00 crore on a total income of ₹76,661.00 crore

Asset Quality Improvement

The bank's asset quality has shown significant improvement:

• Gross Non-Performing Asset (GNPA) ratio decreased to 2.35% as of September 30
• Net Non-Performing Asset (NNPA) ratio improved to 0.54%
• Provision Coverage Ratio (PCR) stood at a healthy 93.59%

Outlook

CARE Ratings has maintained a 'Stable' outlook for Canara Bank, expecting the bank to continue its steady growth in advances and deposits while maintaining stable asset quality and comfortable capitalization levels.

The strong credit ratings and positive outlook underscore Canara Bank's robust financial health and its important position in India's banking sector. As the fourth-largest public sector bank in terms of asset size, Canara Bank's performance will likely continue to be closely watched by investors and market analysts.