Canara Bank aims to boost its low-cost CASA ratio to 32% this fiscal year to reduce expensive bulk deposit reliance. The lender is balancing this goal with a ₹50,000 crore corporate loan pipeline and plans to raise funds for expansion. Managing higher deposit costs remains a key investor focus as the bank competes with peers holding larger low-cost deposit bases.
Canara Bank is realigning its funding strategy to lower costs by increasing its Current Account Savings Account (CASA) ratio to between 30% and 32% by the end of this financial year. As of June 30, 2026, the bank reported a CASA ratio of 29.7%. For bank investors, this is a critical metric because a higher CASA ratio typically means a larger portion of funds comes from low-cost savings and current accounts, which helps improve profit margins by reducing the overall cost of borrowing money.
Deposit Costs and Competitive Landscape
Managing Director and CEO Brajesh Kumar Singh recently noted that the bank’s deposit cost stands at 5.27%. The bank is currently paying more for its funds than many of its competitors, some of whom maintain CASA ratios above 35%. While individual savings deposits grew by over 12% in the recent period, the bank’s reliance on bulk, higher-interest deposits has put pressure on its cost structure. Moving toward a 32% CASA target is a strategic effort to decrease this dependency and achieve more stable, long-term profitability.
Capital Raising and Technology Spending
To support its growth ambitions, Canara Bank has outlined a significant capital-raising plan. The board has approved a resolution to raise ₹8,500 crore through Tier-I and Tier-II bonds. Additionally, the bank is considering international funding options, including Foreign Currency Non-Resident (FCNR) deposits, external commercial borrowings, and overseas foreign currency bonds, aiming to raise approximately $2.3 billion to $2.5 billion. Parallel to these funding efforts, the bank has committed over ₹3,000 crore toward IT modernization, digital infrastructure, and cybersecurity to enhance its service capabilities.
Loan Portfolio and Growth Outlook
While the bank works on its deposit base, it is also actively pursuing corporate credit growth. The bank currently has a pipeline of corporate loans valued at about ₹50,000 crore, with demand coming primarily from sectors like green finance, power infrastructure, and data centers. This corporate push is running alongside efforts to grow the retail, agriculture, and MSME loan segments.
For investors, the most important monitorable is whether the bank can successfully improve its CASA ratio while maintaining loan growth. A failure to attract more low-cost deposits while continuing to expand the loan book could force the bank to continue relying on expensive bulk funding, which may keep profit margins under pressure compared to more efficient peers. The timing of the planned bond issuance and the actual progress on the 32% CASA target will be the next key updates to track in upcoming quarterly results.