Canara Bank has raised Rs 5,000 crore by issuing Basel III compliant Tier II Bonds, Series I.
What are Basel III Tier II Bonds?
Basel III Tier II Bonds are long-term debt instruments issued by banks to raise capital in order to meet international banking regulations known as Basel III norms. These norms are designed to make banks stronger and more stable by ensuring they maintain sufficient capital to absorb losses during financial stress. Tier II capital is considered supplementary capital, meaning it provides an additional layer of financial protection beyond the bank’s core capital (Tier I).
Tier II bonds are usually unsecured, subordinated, non-convertible, and carry a fixed rate of interest. They typically have a maturity period of around 10 years and may include a call option after five years. Since they are subordinated, in case of liquidation they are repaid after other senior debts but before shareholders. Banks issue these bonds to improve their capital adequacy ratio and support business growth without diluting ownership.
Details of the Bond Issue
The bonds carry a coupon rate of 7.24% and are unsecured, subordinated, listed, rated, non-convertible, redeemable, fully paid-up and taxable. These bonds are Basel III compliant Tier II bonds in the nature of debentures, with a face value of Rs 1 crore each.
The total issue size was Rs 5,000 crore. This included a base issue of Rs 2,000 crore and a green shoe option of Rs 3,000 crore. The bank accepted the full amount of Rs 5,000 crore (Rupees Five Thousand Crores Only).
A total of 5,000 bonds were issued, and the number of allottees was 12.
Issue Timeline
- The bond issue opened on February 26, 2026.
- It closed on the same day, February 26, 2026.
- The date of allotment was February 27, 2026.
Maturity and Call Option
The bonds will mature on February 27, 2036. However, the bank has a call option at the end of five years and on every anniversary thereafter.
Interest Payment
Interest will be paid annually on February 27 every year until the maturity date or the call option date, whichever is earlier.
Listing and Identification
The bonds carry the ISIN number INE476A08274 and are proposed to be listed on the National Stock Exchange (NSE).
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