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Canara Bank to raise Rs 500 cr via bonds

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Mr M.B.N. Rao (right), Chairman and Managing Director, Canara Bank, and Mr Swaminathan, Executive Director, at a press conference in Bangalore on Thursday. — G.R.N. Somashekar

Bangalore , June 30

CANARA Bank proposes to raise at least Rs 500 crore through bonds during the current financial year to augment its capital.

Speaking to reporters here today, Mr M.B.N. Rao, Chairman and Managing Director, said this capital was required in view of the high credit growth. The credit growth was upwards of 30 per cent during last year.

He, however, ruled out equity issue during the year, in view of the high capital to risk weighted assets ratio. This ratio for Canara Bank is currently upwards of 14 per cent. The high capital adequacy was also contributed by the recovery efforts of the bank and balance sheet clean-up through liquidation of non-performing assets. So far the bank has sold about Rs 100 crore of bad loans to the Asset Reconstruction Company of India Ltd.

Mr Rao said that the bank, which is celebrating its centenary year, was launching special deposit products targeting senior citizens. This product, branded as Canrelax, would be in the form of an annuity scheme offering the benefits of a pension. This scheme would be in the form of 5-year and 10-year duration deposits. "These products will offer fixed rates of interest though we may look at a floating option sometime in future," he said.

The products, he said, were entirely designed as part of the social banking efforts. These long-term deposits would not be treated as the bank's tier two capital, he added.

Referring to growth of credit, he said, the bank had managed to show a high growth in advances. However, the focus was on retail banking, he added. This year so far, the bank has targeted a share of 30 per cent of retail credit over the next three years.

The bank this year planned to bring at least 1,000 more branches into the computer network, Mr Rao said. Besides, the bank also planned to expand its operations into South Africa, West Asia and to North America. In addition, the bank proposed to convert some of its existing operations in Shanghai to full-fledged branches. The bank's deposit taking company in Hong Kong is in the process of being upgraded into a branch.

He also said that the bank would look at acquisition for growth. For the moment, however, the bank had not identified any potential partner for the purpose, he added.

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