Canara Bank, one of the largest Public Sector Banks owned by the government of India, is going to raise about Rs 5,000 crore equity capital through various modes in the current fiscal year to boost its capital adequacy ratio considering expansion plans. The bank will talk about this to its shareholders in its Annual General Meeting (AGM) which will be held on August 10 through audio/visual means in the light of coronavirus pandemic.
In the annual report for the year 2019-2020, the bank has mentioned that there is a need to raise the capital to further strengthen the capital adequacy ratio on account of expansion plans of the bank, the execution of Basel III norms, and resultant capital charges.
Canara Banks, headquartered at Bengaluru, amalgamated Syndicate Bank into itself with effect from 1st April 2020. The bank has about has Rs 1,030.23 crore as equity capital currently and it’s capital adequacy ratio stood at 13.65% as on 31st March 2020, well above the regulatory requirement of 10.875%.
As per annual report for FY20, the Board of Directors of the bank have decided to increase capital to the extent of Rs 5,000 crore through various means such as right issue, Follow-on Issue, preferential issue to financial institutions and government, Qualified Institutional Placement (QIP) and other granted means of increasing capital.
In the earlier AGM held in July 2019, the bank had taken permission from its shareholders for raising about Rs 6,000 crore as new equity capital through various means including a QIP. However, the bank said it did not raise capital through any of the modes approved by the shareholders, while the government infused equity capital worth Rs 6,571 crore in place of preferential allotment of shares on December 4, 2019.
L V Prabhakar, Managing Director & CEO of Canara Bank, in his message to shareholders amid the global pandemic, said the outlook at this period remains uncertain given the depth of economic implications of the ongoing pandemic wave.
He added that the bank looks forward to improving its bottom line with a balanced thrust on MSME, retail, and corporate advances along with increased adoption of digitalization for efficiency improvement. Also, in the coming years, the bank looks forward to leveraging amalgamation benefits for maximizing efficiency and productivity.
