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Canara Bank today said it will seek shareholders’ approval in the ensuing Annual General Meeting in July to raise Rs 2,000 crore to create capital buffer.
The bank seeks to raise the capital by allotting equity shares/preference shares/securities by way of follow on public issue, rights issue and/or on a private placement basis, Canara Bank said in a filing to BSE.
“The issue proceeds will enable the bank to strengthen its capital adequacy requirements as specified by RBI from time to time”, the bank said.
The state-owned lender’s capital adequacy ratio, as on March 31, 2016, stood at 11.08 per cent, and was well above the 9 per cent stipulated by the Reserve Bank.
CAR is a measure of a bank’s capital to cushion against or absorb a reasonable amount of losses before they become insolvent and consequently lose depositors’ funds. It ensures efficiency and stability of a financial system by lowering the risk of banks becoming insolvent.
On the pricing, Canara Bank said it cannot be decided except at a later stage, and it is not possible to state the price of shares to be issued.
Shares of Canara Bank closed 0.23 per cent lower at Rs 214.35 on BSE.
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