Canara Bank Strategizes Priority Sector Loan Sales Amid Interest Rate Challenges

State-owned Canara Bank is set to sell its surplus priority sector loans this quarter, aiming to counter margin pressures from interest rate declines. In the June 2025 quarter, the bank earned Rs 1,248 crore from this strategy, yet its priority debt remains above the regulatory threshold.

Canara Bank's MD and CEO, K Satyanarayana Raju, pointed out that maintaining the Net Interest Margin (NIM) target of 2.75% is challenging amid a 100 basis point rate cut by the RBI. He noted potential relief from asset stake sales and subsidiary listings within the year.

The bank seeks to list Canara Robeco AMC through an IPO and plans a similar move for Canara HSBC Life Insurance. Despite selling shares, the bank intends to retain majority control and enhance fee income from these ventures.

(With inputs from agencies.)