State-owned Canara Bank today said it plans to raise Rs 1,500 crore soon from bonds to fund business growth and meet global capital adequacy norms.
The bank has decided to raise Additional Tier- I instruments amounting to Rs 1,500 crore through issue of Basel-III complaint perpetual bonds by way of private placement, Canara Bank said in a statement.
The fund raised would be used to augment capital resources of the bank, it said.
The bond issue, which opened on February 16, carries a coupon rate of 9.55 per cent. The issue would close on March 5.
AT-1 bonds, which qualify as core or equity capital, are one of the means of raising capital by public sector banks that require Rs 2.40 lakh crore by March 2019 to meet global norms on capital adequacy (Basel III).
Besides, the government has decided to provide Rs 570 crore to the bank as part of capital infusion plan.
Public sector banks require equity capital of Rs 2.4 lakh crore by 2018 to meet the global, Basel III, norms on capital adequacy. For the current fiscal, the government has allocated Rs 11,200 crore for bank capitalisation.
Finance Minister Arun Jaitley in the Budget speech had said that "to be in line with Basel-III norms there is a requirement to infuse Rs 2,40,000 crore as equity by 2018 in our banks. To meet this huge capital requirement we need to raise additional resources to fulfil this obligation".
While preserving the public ownership, the capital of these banks will be raised by increasing the shareholding of the people in a phased manner through the sale of shares largely through retail to common citizens of this country, the minister had said.
The government has infused Rs 58,600 crore between 2011 and 2014 in the state-owned banks.
The Canara Bank scrip closed at Rs 404.20 apiece, up 1.37 per cent on the BSE.
