Exercising of Call Option of Basel III complaint Additional Tier I Bonds (ISIN: INE476A08084 & INE476A08092)- RBI Approval
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Canara Bank has received RBI approval to exercise the call option on two Basel III Additional Tier 1 (AT1) perpetual bonds on their due dates of 11 September 2025 and 29 September 2025. The first bond (INE476A08084) is for Rs 1,012 crore at 8.30% coupon, and the second (INE476A08092) is for Rs 169.10 crore at the same rate. The bank is now in the process of redeeming these bonds as per their original terms. Both bonds were issued in September 2020 with a perpetual tenor, meaning the bank has the option but not the obligation to redeem them at the 5-year call date.
This is a positive signal for shareholders as it indicates the bank has healthy capital adequacy and is choosing to retire relatively high-cost perpetual debt. The redemption will reduce future interest outflows but may also signal that the bank doesn't need this additional Tier 1 capital buffer, reflecting strong capital position.