The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs. 4,35,550 on Canara Bank for deficiencies found during an inspection of its currency chest operations. This development comes as part of RBI's ongoing efforts to ensure compliance and maintain the integrity of the banking system.

Inspection Findings

The inspection, conducted from October 29 to 31, revealed several issues:

1. Shortage of notes in the currency chest
2. Presence of mutilated notes in the currency chest balance
3. Other unspecified deficiencies

Penalty Details

Impact Assessment

Canara Bank has disclosed that the impact of this penalty on its financial, operational, or other activities is not significant. This statement suggests that the bank views the penalty as a relatively minor setback in its overall operations.

Regulatory Compliance

This incident underscores the importance of strict adherence to regulatory guidelines in the banking sector. Currency chest operations are crucial for maintaining the flow of cash in the economy, and any discrepancies can lead to regulatory action.

Conclusion

While the penalty imposed by RBI is relatively small in the context of a large bank like Canara Bank, it serves as a reminder of the ongoing scrutiny faced by financial institutions. Banks must remain vigilant in their operations to avoid such penalties and maintain the trust of both regulators and customers.

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.