Canara Bank has announced that it will raise ₹4,000 crore by issuing Basel III-compliant Tier II Bonds. The bidding for these bonds will take place on March 17, 2025, through the NSE Electronic Bidding Platform (EBP).
What Are Basel III-Compliant Tier II Bonds?
Banks raise money through bonds to improve their financial strength. Basel III is a set of international banking regulations designed to ensure that banks have enough capital to handle financial crises.
Tier II Bonds are a type of debt instrument issued by banks to strengthen their capital base. They are riskier than Tier I bonds but still provide financial stability to banks.
- These bonds have a fixed tenure (in this case, 10 years).
- The issuer (Canara Bank) has the option to call back (repay early) after 5 years.
- Investors who buy these bonds lend money to the bank and earn interest in return.
Since these bonds are Basel III compliant, they help the bank meet regulatory requirements and maintain financial health.
Why is Canara Bank Raising Money Through These Bonds?
Canara Bank, like other banks, needs to maintain sufficient capital reserves to ensure its financial stability. To do this, it raises funds through different types of bonds.
Earlier, the Board of Directors of Canara Bank approved a plan to raise:
- ₹4,000 crore through Additional Tier I Bonds
- ₹4,500 crore through Tier II Bonds
The bank had already raised ₹3,000 crore through Tier I bonds in August 2024. Now, it is issuing Tier II bonds worth ₹4,000 crore to continue strengthening its capital base.
How Safe Are These Bonds for Investors?
Investors always check the credit rating of bonds before investing. These Canara Bank Tier II bonds have been given a AAA/Stable rating by CRISIL and CARE, which means:
✔ The bank is financially strong.
✔ The risk of default is very low.
✔ Investors can expect timely interest payments.
How Will the Bidding Process Work?
The bond sale will take place on March 17, 2025, via the NSE Electronic Bidding Platform (EBP). This is an online platform where institutional investors (such as mutual funds, insurance companies, and large investors) can place bids to buy the bonds.
Conclusion
Canara Bank is raising ₹4,000 crore through Basel III-compliant Tier II Bonds to meet capital requirements and improve financial stability. These bonds come with a AAA/Stable rating, making them a low-risk investment option for large investors.
This move aligns with the bank’s broader strategy to strengthen its capital reserves and ensure long-term financial growth.
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