Canara bank to raise Rs.1128 crore via rights issue
State-owned Canara Bank revealed its plans to raise up to Rs.1,128 crore to fund business growth through rights issuance. The board of the bank also ratified raising of $500 million from overseas markets by the sale of bonds. The board of the bank allowed it to raise Rs.748 crore from the government and Rs.380 crore from the public shareholders.
Canara Bank: 66% stake held by government
Canara Bank is A state owned bank, owned by Karnataka. Currently, the government holds "66.30 per cent stake in the bank."
Canara Bank records a drop in the Q4 results
Canara Bank reported a loss of Rs.3905.49 crore in Q4 March 2016. In Q4 March 2015, the bank had closed with a net profit of Rs.612.96. Canara bank's gross non-performing assets (NPAs) totalled at Rs.31637.83 crore as on 31 March 2016 as compared to Rs.19813.44 crore the previous year December and on 31 March 2015 stood at Rs.13039.96 crore.
Centre gives a Rs.997 crore push to Canara Bank
The Centre allocated Rs.22,915 crore in 13 public banks with maximum NPAs. Canara Bank said it welcomed the much needed infusion of Rs.997 crore capital. The bank said this would help the bank "undertake its planned expansion more confidently,". Canara Bank had raised approximately Rs.3,000 crore by the end of April in the form of Tier-2 bonds.
Canara Bank gets shareholders' approval to raise Rs.2000 crore
Canara Bank revealed that it had got shareholders' nod for the proposal to raise its capital by up to Rs.2,000 crore. The bank will raise this capital by the further issue of "equity/preference shares or other securities either by way of follow-on public issue, rights issue, private placement" etc. This move was ratified by a majority of Canara Bank shareholders.
What is rights issue?
Companies use the rights issues to raise money when they are cash strapped by granting the shareholders an opportunity to get "new shares at a discount to the current trading price."