Satyanarayana Raju, Managing Director and CEO, Canara Bank
Canara Bank is focused on quality growth and profitability as it continues its strategic shift into the retail, agriculture and MSME (RAM) segments.
Satyanarayana Raju, managing director and CEO of Canara Bank, said the public sector lender will resist the ongoing ‘rate war’ in corporate lending, and will instead focus on building a 60:40 mix between RAM and corporate loans, as margins are squeezed and financing costs rise.
The bank expects the RAM portfolio to grow faster than the corporate portfolio over the next two quarters, he added.
“Our strategy is to achieve a 60:40 mix between RAM and business sectors,” said Raju. “We do not want to expand corporate lending at the expense of our bottom line, nor participate in the interest rate war that is eroding profitability. We remain cautious on this front.”
For the second quarter of FY26, Canara Bank reported a 19 percent year-on-year increase in net profit to ₹4,774 crore. However, net interest income (NII) declined 1.87 per cent to ₹9,141 crore from ₹9,315 crore in the same period last year.
Margins have compressed somewhat this quarter. Do you expect NIMs to stabilize quickly?
There is pressure on margins due to the interest rate environment. As deposit rates are revised and loan rates are adjusted with some delay, this will have some impact. However, as transmission stabilizes and expensive deposits are replaced, we expect NIMs to gradually recover.
The bank’s board has approved a capital raise of ₹9,500 crore for FY26. How is that progressing?
We will complete the entire recruitment process in the second half (H2) of this financial year. We will collect part of the amount this quarter, the remaining part in the next quarter. We feel very comfortable in that regard. Whenever we come up with a public issue or bond issue, our offers are always subscribed to multiple times. The ₹9,500 crore includes ₹6,000 crore through Tier II bonds and ₹3,500 crore through Additional Tier I (AT1) bonds.
Car loans and home loans have shown strong dynamics. What drives this growth?
The VAT cuts have given a positive boost to car loans, which are now growing at around 25 percent. On an annual basis, growth is over 100 percent. We are seeing strong demand, especially in the four-wheeler segment. Growth in home loans also continues at more than 15 percent.
How exposed are you to the real estate and construction segment?
We actively participate in both infrastructure and real estate construction. Over the past six months, we have seen several transactions in the real estate segment. Commercial office construction has also increased as demand for workspace has increased. We finance both commercial and residential projects and are also active in the field of rental discounts. In terms of growth, our exposure to these segments is in line with the business portfolio, with growth of approximately 10 to 12 percent.
Digital loans have become an important growth driver for banks. How important is this for Canara Bank’s portfolio?
We are gradually migrating all of our RAM and approximately 30 products have been transitioned to digital travel. By the end of March, or within the next one or two quarters, we aim to bring the entire RAM portfolio into digital mode. Until recently, such facilities were largely limited to deposits, but now we are extending end-to-end digitalization to loan processing as well. Currently, approximately 94 percent of all our transactions are digital, compared to approximately 87 percent two years ago, and this share continues to rise steadily.
Published on October 31, 2025
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