ii) Liquidity coverage ratio (LCR)
QUALITATIVE DISCLOSURE
Liquidity Coverage Ratio (LCR) standard has been introduced with the objective that a Bank maintains an adequate level of unencumbered High Quality Liquid Assets (HOLAs) that can be converted into cash to meet its liquidity needs for a 30-calendar day time horizon under a significantly severe liquidity stress scenario.
Minimum requirement of LCR as stipulated by RBI is 100% for the calendar year 2019 onwards. RBI has mandated the management of LCR both at solo and consolidated level.
HOLA comprises of Level 1 assets (0% hair-cut), Level 2A assets (15% hair-cut) and Level 2B assets (50% hair-cut). Level 1 assets comprising of cash, excess CRR, excess SLR securities, Government securities to the extent allowed by RBI under Marginal Standing Facility (MSF) [2% of the Bank's Net Demand & Time Liabilities (NDTL)] and Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR) [16% of the Bank's NDTL]. Level 2A assets comprises of sovereign guaranteed marketable securities, corporate bonds or commercial papers which are rated AA- and better, issued by non-financial institutions.
Expected net cash outflows under stress are the weighted sum of outflows minus inflows in the next 30 days. The inflows are taken with pre-defined haircuts and the outflows are taken at pre-defined run off factors. Funding from retail and small business customers carries lower run-off factor as compared to wholesale funding.
Composition of HOLA: The Bank during the three months ended 31st March 2026 maintained average HOLA of '3,22,314.64 Crores of which Level 1 assets comprised of 99.25% of the total stock of HOLA. Facility to avail Liquidity for Liquidity Coverage Ratio constitutes the highest portion to HOLA i.e., around 71.90% of the total HOLA. Level 2 assets which are lower in quality as compared to Level 1 assets, comprised of 0.75% of the total stock of HOLA as against the maximum permissible level of 40%.
Funding Profile: Unsecured wholesale funding constitutes a major portion of total weighted cash outflow. Retail deposits and deposits from small business customers put together contributed to around 18.89% of the total weighted cash outflows. Deposits from non-financial corporates, sovereigns,
central banks, multilateral development banks and PSEs contributed to around 29.35% of the total weighted cash outflows. Bank's exposure is majorly in Indian Rupee.
LCR of the Bank: Bank has maintained LCR well above the minimum regulatory level on an ongoing basis. Historical trend of Consolidated LCR of the Bank is as follows:
The daily average LCR of Canara Bank (Consolidated) for the quarter ended 31st March 2026 was 116.93%. The Bank has been maintaining HQLA mainly in the form of SLR investments over and above the mandatory requirements. The Bank has consistently kept a healthy funding profile with a major portion of funding through deposits. Retail deposits constitute a major portion of the total funding; the sources are diversified. In addition to daily/monthly LCR reporting, Bank also monitors the liquidity position through various regulatory statements viz. Structural Liquidity Statement and Stock Ratios. Derivative exposures are considered insignificant due to almost matching inflows and outflows position. During the quarter, LCR for USD (significant foreign currency constituting more than 5% of the balance sheet of the Bank was 91.50% on an average.
Liquidity Management in the Bank is driven by the ALM Policy of the Bank and regulatory prescriptions. The ALCO has been empowered by the Bank's Board to formulate the Bank's funding strategies to ensure that the funding sources are well diversified and is consistent with the operational requirements of the Bank. Adequate Contingency Funding Plan is also in place, which is reviewed on a periodic basis to ensure the availability of funds to meet any event which will increase the stress in liquidity. Monitoring of liquidity is centralized at Risk Management Wing, Head Office and managed centrally at Integrated Treasury Vertical, Head Office.
v) Divergence in asset classification and provisioning
We have examined the compliance by the Bank in respect of IRAC norms issued by Reserve Bank of India from time to time and based on: -
a) Automated Systems and Procedures laid down by the Bank reckoning RBI guidelines; information and explanations furnished by the Bank;
b) Certificates and MOCs issued by Auditors in respect of the branches / circle offices audited by them;
c) Exceptions permitted by the Board of Directors for manual maintenance of borrowers outside the purview of system driven Income Recognition, Asset Classification & Provisioning;
d) We hereby certify that the Bank has generally complied with the prescribed norms for Income Recognition, Assets Classifications and Provisioning requirements while finalising the accounts for the year ended 31.03.2026.
vi) Disclosure of transfer of loan exposures
1. Details of loans transferred / acquired during the period ended 31.03.2026 are given below: -
a) Loans transferred / acquired not in default during the year ended 31.03.2026.
b) The Bank has not acquired any Stressed Loans (NPAs)/ Special Mentioned Accounts (SMA) during the year ended 31.03.2026.
c) Details of Stressed Loans (NPAs) transferred during the year ended 31.03.2026:
1. At March 31, 2026, excludes investment in equity and preferential shares of ' 4498.74 Cr (March 31, 2025: '4016.36 Cr) exempted from regulatory ceiling, out of which investments of '1928.84 Cr (March 31, 2025: ' 1951.10 Cr) were equited due to conversion of debt to equity and preferential shares during restructuring process under RBI circular dated November 28, 2025 on "Reserve Bank of India (Commercial Banks -Resolution of Stressed Assets) Directions, 2025."
Note: For restructuring of dues in respect of listed companies, lenders may be ab initio compensated for their loss/ sacrifice (diminution in fair value of account in net present value terms) by way of issuance of equities of the company upfront, subject to the extant regulations and statutory requirements. If such acquisition of equity shares results in exceeding the extant regulatory Capital Market Exposure (CME) limit, the same shall be disclosure in the ‘Notes to Accounts' in the Annual Financial Statements. Banks shall separately disclose details of conversion of debt into equity as part of strategic debt restructuring which are exempt from CME limits.
vii) Unhedged foreign currency exposure
Reserve Bank of India vide its communication Number DBOD.No.BP.BC. 85 /21.06.200/2013-14 dated January 15 2014 advised the Bank to provide incremental provision and capital with regard to Bank's exposure to entities with unhedged foreign currency exposures. Accordingly, for the financial year 2025-26 Bank is holding a provision of '73.02 Crores (previous year '32.47 Crores) towards unhedged foreign currency exposure.
Policy to manage currency induced credit risk with regard to Unhedged Foreign Currency Exposure are dealt with as per the guidelines issued by Reserve Bank of India vide their notification DOR.CRE. REC.76/07-02-001/2025-26 dated 28.11.2025
The Unhedged Foreign Currency Exposure (UFCE) and Annual Earnings are computed before Interest and Depreciation (EBID) for each borrower entity. UFCE is arrived at first by calculating the gross foreign currency exposure of the entity and then deducting the extent of hedge by way of derivative contract and natural hedge on account of cash flow from operations (of the entity). The extent of potential loss to the entity will be calculated by multiplying the UFCE with Largest Annualised Volatilities (LAV) seen in USD/INR rates during the last ten years period. In case of Overseas Branches / Subsidiaries; potential loss due to UFCE shall be computed by replacing INR with the domestic currency of that jurisdiction and USD with the foreign currency (i.e., currency other than domestic currency of that jurisdiction) in which the entity has maximum exposure. Potential loss on account of exchange rate movements are compared with annual EBID (Earnings Before Interest & Depreciation) and expressed as a percentage of EBID i.e., Potential loss/EBID percentage. As a prudential measure, Bank is holding incremental capital and make incremental provisioning (over and above the extant standard assets provisioning) on the total credit exposure to such entities at the specified rates.
iv) Disclosures on risk exposure in derivatives
a) Qualitative disclosures
The Credit Risk Management Policy, approved by the Board of Directors, on the use of derivative instruments to hedge /trade is in place.
The Investment Portfolio of the Bank consists of assets with characteristics such as fixed interest rate, zero coupon and floating interest rates and is subject to interest rate risk. The Bank also has issued Tier I & Tier II bonds and this capital cost is at fixed rate with no exit option. The policy permits hedging the interest rate risk on this liability as well.
The Bank undertakes derivative transactions restricted to Cross Currency Swaps (CCS) / Cross Currency Interest Rate Swaps (CCIRS), Rupee Interest Rate Swaps (OIS), and exchange-traded Currency Futures, primarily for hedging currency and interest rate risks arising from balance sheet exposures and for asset-liability management purposes. The Bank follows a prudent and conservative approach and does not engage in structured or speculative derivative transactions beyond approved risk limits.
A robust risk management framework is in place to identify, measure, and monitor risks arising from these derivatives. Interest rate risk is assessed through PV01 while foreign exchange risk (in CCS/CCIRS and Currency Futures) is managed through net open position limits and sensitivity measures. Market risk is evaluated using Value at Risk (VaR) along. Counterparty credit risk for OTC derivatives is measured as per regulatory guidelines, while exchange-traded currency futures are subject to margining and clearing mechanisms of the exchanges.
All outstanding CCS/CCIRS and Rupee Interest Rate Swaps (OIS) contracts are marked-to-market using robust discounted cash flow valuation methodologies and cross-currency basis spreads. Exchange-traded currency futures are valued based on daily mark-to-market settlement prices published by the respective exchanges and are subject to prescribed margining and clearing mechanisms. The overall valuation framework is supported by periodic independent price verification to ensure accuracy, consistency, and reliability, in line with internal policies, established control frameworks, and applicable regulatory guidelines.
The Bank maintains a well-defined governance framework with clear segregation of front, mid, and back-office functions, supported by internal controls, audit processes, and regulatory reporting systems. Liquidity risk arising from derivative cash flows, including stress scenarios such as interest rate shocks and basis spread movements, is also actively monitored and managed.
Banks shall disclose their risk management policies pertaining to derivatives with particular reference to the extent to which derivatives are used, the associated risks and business purposes served. The disclosure shall also include:
a) The structure and organization for management of risk in derivatives trading,
b) The scope and nature of risk measurement, risk reporting and risk monitoring systems,
c) Policies for hedging and / or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges / mitigants, and
d) Accounting policy for recording hedge and non-hedge transactions; recognition of income, premiums and discounts; valuation of outstanding contracts; provisioning, collateral and credit risk mitigation.
iii) Marketing and distribution:
The details of fees / remuneration received in respect of the marketing and distribution function (excluding Bancassurance business) undertaken: Nil
vi) Implementation of IFRS converged Indian Accounting Standards
RBI vide Circular DOR.STR.REC. No. 6/21.06.011/2026-27 dated April 27, 2026 has issued guidelines on implementation of Expected Credit Loss (ECL) based provisioning framework applicable to the Banks from April 01, 2027.
The Bank has initiated necessary measures for implementation of said guidelines, including appointment of technical consultant and IT vendor and is in the process of developing required systems and processed to ensure compliance within the regulatory timelines.
viii) Disclosure on amortization of expenditure on account of enhancement in family pension of employees of Banks - Nil
ix) Disclosure of Letters of Comfort (LoCs) issued by Banks
Bank has not issued any letter of comforts during the financial year during year 2025-26.
Only one LOC issued vide dated 03/08/2009 in favour of Central Bank of UAE on behalf of Representative Office, Sharjah is outstanding as on date.
Financial Impact:
As our Representative office, Sharjah is not undertaking any commercial operations; there is no financial impact of LOC issued in favour of Central Bank of UAE.
Canara Bank (being sponsor Bank of Karnataka Grameena Bank) has issued Letter of Comfort to Micro Units Development & Refinance Agency Limited (MUDRA Ltd) to undertake liability of its sponsored RRB - Karnataka Grameena Bank up to '800 Crores (Rupees Eight Hundred Crores Only). The amount shall be paid by the Bank on account of such assistance provided by MUDRA in case of inability on part of the RRB to do so.
16. Accounting Standards
In compliance with the guidelines issued by the RBI regarding disclosure requirements of the various Accounting Standards issued by Institute of Chartered Accountants of India (ICAI), the following information is disclosed:
a) Accounting Standard 5 - Net Profit/Loss for the period, prior period items and changes in accounting policies:
There are no material prior period items.
b) Accounting Standard 11 - The Effects of Changes in Foreign Exchange Rates
Branch's reporting currency is US Dollar. Financial statements are submitted in USD and the same is consolidated at parent Bank level in INR.
Assets and Liabilities (both monetary and non-monetary as well as contingent liabilities) are translated at the closing spot rate of exchange announced by Foreign Exchange Dealers' Association of India (FEDAI) as at the end of each quarter and Income and Expenditure items of the foreign branches are translated at the quarterly average rate published by FEDAI in accordance with Accounting Standard (AS) 11 (The effect of Changes in Foreign Exchange rates) issued by the ICAI and as per the guidelines of RBI regarding the compliance of the said standard.
c) Accounting Standard 15 - Employee Benefits:
The actuarial assumptions in respect of gratuity, pension and privilege leave, for determining the present value of obligations and contributions of the Bank, have been made by fixing various parameters for
- Salary escalation by taking into account inflation, seniority, promotion and other factors mentioned in Accounting Standard 15(Revised) issued by ICAI.
- Attrition rate by reference to past experience and expected future experience and includes all types of withdrawals other than death but including those due to disability.
- Provision towards sick leave has been made in the books of account on the basis of Actuarial valuation
New Pension Scheme Contribution
The Bank has a Defined Contribution Pension Scheme (DCPS) applicable to all categories of officers joining the Bank on or after August 1, 2010. The Scheme is managed by NPS Trust under the Pension Fund Regulatory and Development Authority. National Securities Depository Limited has been appointed as the Central Record Keeping Agency for the NPS.
* The Bank has decided to disinvest its stake in Canbank Factors Ltd., and has obtained requisite regulatory approvals.
** Canara Tanzania Ltd. (In Liquidation) (CTL), a wholly owned subsidiary of the Bank has transferred its major assets and liabilities to M/s Exim Bank Tanzania Ltd. and surrendered the license with effect from 21.12.2024. Bank has received payment of USD 10 mn during the current FY and balance amount of USD 1.68 mn has been deposited in an Escrow account towards retention money (till 20.12.2026 i.e. 2 years from 21.12.2024) in compliance with local regulatory requirement.
#Canara Robeco Asset Management Company Ltd., and Canara HSBC Life Insurance Company Ltd., were listed on BSE and NSE on 16.10.2025 and 17.10.2025 respectively, pursuant to sale of shareholding through Offer for Sale (Offer for Sale-IPO). Following the listing and sale of shares, the Bank's shareholding in these companies reduced from 51% in each company to 38% and 36.50% respectively. Consequently, with effect from the respective listing dates, these companies have ceased to be subsidiaries and became associates of the Bank and they are consolidated as associates as on 31.03.2026. The aforesaid divestment resulted in a pre-tax profit (net of expenses) of '1929.56 Crores in standalone basis and '1800.93 Crores in consolidated basis as per applicable Accounting Standards on Consolidated Financial Statements.
The Bank had sponsored 4 RRBs till April 2025. In Compliance to the Gazette Notification CG-DL-E07042025-262329 dated April 07, 2025 issued by Government of India for amalgamation of erstwhile Regional Rural Banks - Karnataka Vikas Grameena Bank and Karnataka Gramin Bank (operating in the state of Karnataka and sponsored by Canara Bank), the two Regional Rural Banks amalgamated into a single Regional Rural Bank i.e Karnataka Grameena Bank (Sponsored by Canara Bank), under the concept "One State-One RRB" w.e.f. May 01, 2025.
The Bank presently holds 35% of equity of the newly formed entity Karnataka Grameena Bank effective May 01, 2025 and the same is consolidated as an Associate. The Investment in the associate has been accounted under equity method as per AS 23 (Accounting for Investment in Associates in consolidated financial statements).
As both the amalgamating RRBs were sponsored by Canara Bank, the carrying amount of investment of the amalgamated RRB in the consolidated financial statements is equal to the carrying amount of investment of the respective RRBs.
In respect of erstwhile associate, Andhra Pragathi Grameena Bank (APGB) (sponsored by Canara Bank), Central Government, vide gazette notification No. CG-DL-E-07042025-262329 dated 07.04.2025 Para S.O. 1626(E) notified amalgamation of Andhra Pradesh Grameena Bank (sponsored by Union Bank of India) with effect from 01.05.2025.
On amalgamation as mentioned above, the carrying amount of Bank's investment in equity shares of APGB of '14.82 Crores has been received. The surplus being difference in carrying amount of investment in APGB mentioned in Consolidated Financial Statements and actual amount received is '1833.03 Crores and the said surplus is reported under extraordinary items in Consolidated Financial Results.
The Reserve Bank of India, vide its letter no. RBI/2024-25/127 DOR.ACC.REC No. 67/21.04.018/2024-25 dated 20.03.2025, permitted RRBs specifically to amortize the additional pension liability over a period not exceeding five years, beginning with the financial year 2024-25, subject to a minimum of 20 percent of the total pension liability being expensed every year.
Karnataka Gramin Bank (e-KGB) and Karnataka Vikas Grameena Bank (e-KVGB) had opted for amortization of the additional pension liability of '270.79 Crores, to be amortized over a period of 5 years. The total unamortized liability of e-KGB and e-KVGB as on 31.03.2025 was '216.63 Crores. For year ended 31.03.2026, an amount of '54.16 Crores has been amortized and balance amount of '162.47 Crores will be amortized till 31.03.2029. Had the entire additional liability been accounted as expense in the Profit and Loss Account, the net loss for the year ended 31.03.2026 of newly formed entity Karnataka Grameena Bank would have increased by '162.47 Crores.
Kerala Grameena Bank has absorbed the entire additional pension liability as on 31.03.2025.
HIGHER EDUCATION FINANCING AGENCY (HEFA):
Higher Education Financing Agency (HEFA) is a joint venture of Ministry of Human Resources Development (MHRD) (now Ministry of Education (MoE)), Government of India (90.91%) and Canara Bank (9.09%). The objective is for financing creation of capital assets in premier educational institutions in India, building world-class educational institutes, setting up research facilities, intending to provide a platform through special purpose vehicle for improvement of infrastructure standards of IITs, IIMs, AIIMS, IISc, NIT, IIIT etc.
Based on this, the MoE (erstwhile MHRD) proposed to set up Higher Education Financing Agency (HEFA) a Joint Venture Company with an initial authorized capital of '2000 Cr. MHRD has contributed '1,000 Cr. and Canara Bank had contributed '100 Cr.
Subsequently, the authorized capital was increased to '10,000 Cr wherein Govt. will provide an additional equity of '5,000 Cr. and Canara Bank will contribute '500 Cr. As on 31.03.2026, MoE has infused Capital of '4812.50 Cr. and Canara Bank has contributed '481.25 Cr.
f) Accounting Standard 24- Discontinuing Operation
Disclosure shall be required as under:
i. Discontinuing of the operation has resulted in shedding of liability and realization of the assets by the Bank or decision to discontinue an operation which will have the above effect has been finalized by the Bank and
ii. The discontinued operation is substantial in its entirety.
g) Accounting Standard 27 - Financial Reporting of Interests in Joint Ventures
Not Applicable, since no interest in any Joint Venture as on 31-03-2026.
h) Accounting Standard 28 - Impairment of Assets
Assets are reviewed for impairment at the end of the year whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison for the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such an asset is considered to be impaired, the impairment to be recognized and is measured by the amount by which the carrying amount of the asset exceeds the recoverable amount of the asset. However, in the opinion of the Bank's Management, there is no indication of material impairment to the assets during the year to which Accounting Standard 28 - "Impairment of Assets" applies
17. During the year ended 31.03.2026, Bank has issued Basel III Compliant Additional Tier I Bonds aggregating to '3500 Crores and redeemed Basel III Compliant Additional Tier I Bonds of '2936.10 Crores. Further, during the year ended 31.03.2026, Bank has issued Basel Ill Compliant Tier II Bonds aggregating to '5000 Crores and redeemed Basel Ill Compliant Tier II Bonds '4150 Crores.
18. As per RBI guidelines, DOR.ACC.REC No.86/ 21.04.018 / 2025-26 dated 28, November 2025 the details of the item i.e. Other Liabilities/Other Assets / Other Income / other expenses exceeding 1% of the total Assets / Total income is as under:
19. During the year, Bank has transferred '1000 Crores to Special Reserve created u/s 36 (1) (viii) of Income Tax Act, 1961.
20. Figures of the previous year have been regrouped/ rearranged/reclassified wherever necessary.
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