Canara Bank credit rating actions were disclosed on September 4, 2026, with India Ratings and Research assigning IND AA+/Stable to INR 45 billion of Basel III Additional Tier 1 bonds. The public sector lender informed the exchanges about the rating agency’s decision in a BSE filing on Friday.

India Ratings, a Fitch Group company, also affirmed Canara Bank’s issuer rating at IND AAA/Stable. The rating agency continued to assess the bank and its subsidiaries on a fully consolidated basis.

Ratings across Canara Bank debt instruments

Instrument Issue size Rating and action
Issuer rating Not applicable IND AAA/Stable; affirmed
Basel III AT1 bonds INR 45 billion IND AA+/Stable; assigned
Infrastructure bonds INR 100 billion IND AAA/Stable; affirmed
Basel III Tier 2 instruments INR 95 billion IND AAA/Stable; affirmed
Basel III AT1 bonds INR 120 billion IND AA+/Stable; affirmed

Ind-Ra said the ratings reflect Canara Bank’s systemically important position and the likelihood of continued support from the Government of India. It also cited the bank’s moderate equity-raising ability and expected improvement in profitability over the near to medium term.

For AT1 instruments, the agency considers coupon omission risk, discretionary features and write-down or conversion risk. It said these loss-absorption features distinguish AT1 bonds from senior debt and imply a higher probability of ultimate loss for investors.

Asset quality and operating indicators

Canara Bank’s gross non-performing assets declined to 1.57% in the first quarter of FY27 from 1.84% in FY26, while net NPAs eased to 0.36% from 0.43%. Provision coverage excluding technical write-offs stood at 77.14%.

  • Common equity tier 1 capital improved to 12.91% in Q1 FY27 from 12.44% in FY26.
  • Return on assets stood at 1.04%, while credit cost was 49 basis points.
  • The average consolidated liquidity coverage ratio was 115.25%, above the 100% regulatory requirement.
  • CASA deposits represented 29.7% of deposits, a level Ind-Ra identified as an area where improvement remains to be seen.

The agency described Canara Bank as India’s fourth-largest public sector bank and sixth-largest bank by assets. It had 10,131 domestic branches and four international branches at the end of Q1 FY27. Ind-Ra said a change in government support or a material decline in systemic importance could affect the Tier 2 rating, while weaker support for hybrid instruments or pressure on capital buffers could widen the notching of AT1 ratings.

Source: BSE corporate announcement.