Archive · 28 Nov 2025
Canara Bank Revives AT-1 Bonds Market
Canara Bank is selling special bonds called AT-1 bonds worth ₹3,500 crore.
This is the first time in a year that an Indian bank is doing this.
Other banks like PNB and Union Bank are also planning to sell similar bonds soon.
These bonds help banks raise money to lend more.
The last time this happened was in October 2024 when SBI sold bonds worth ₹5,000 crore.
Banks are doing this because they need more money to lend, but they are not getting enough deposits from people.
So, they are turning to these bonds to get the money they need.
Canara Bank is issuing ₹3,500 crore in AT-1 bonds, the first such issuance in India this financial year.
The bonds are expected to be priced at a coupon rate of 7.5-7.55%, slightly higher than recent tier-II issuances.
Other banks like PNB, Bank of India, Union Bank of India, and Bank of Maharashtra are preparing similar issuances.
Credit growth is subdued at 11% year-on-year, while deposit growth is at 9.7%, prompting banks to explore bond issuances.
Banks are well-capitalized but are turning to bonds due to tightness in the deposit market and expected credit pickup in the second half of the year.
- Who
- Canara Bank, Punjab National Bank (PNB), Bank of India, Union Bank of India, Bank of Maharashtra, Bank of Baroda
- What
- Canara Bank is issuing ₹3,500 crore in AT-1 bonds, reviving the market after a year-long pause. Other banks are preparing similar issuances.
- When
- Canara Bank's bid invitation is on Friday. PNB and Union Bank plan issuances in December.
- Where
- India, with the bonds being issued on the National Stock Exchange.
- Why
- To bolster capital buffers and manage liability due to subdued credit growth and deposit mobilization.
- Amount Raised by Canara Bank
- ₹3,500 crore
- Expected Coupon Rate
- 7.5-7.55%
- Last AT-1 Bond Issue
- October 2024 by SBI (₹5,000 crore at 7.98%)
- PNB's Planned AT-1 Issue
- Up to ₹5,000 crore (₹2,000 crore base + ₹3,000 crore greenshoe)
- Union Bank's Planned Borrowing
- Up to ₹2,000 crore via AT-1 and ₹4,000 crore via tier-II bonds
- 10-Year Benchmark Government Bond Yield
- 6.51%
- Credit Growth (as of 31 October)
- 11% year-on-year
- Deposit Growth (as of 31 October)
- 9.7% year-on-year