Canara Bank may sell its excess priority sector loans in 2nd quarter: MD Raju

New Delhi: State-owned Canara Bank plans to sell its excess priority sector loans in the ongoing quarter to compensate for the stress on margins due to moderation in interest rates. During the quarter ended June 2025, the bank earned Rs 1,248 crore as commission by selling priority sector loans.

Despite sale in the first quarter, the total priority debt stands at 45.63 per cent as against regulatory requirement of 40 per cent of the total loan, Canara Bank MD and CEO K Satyanarayana Raju said. “We have a cushion under priority sector space. There is demand in the market and we may take advantage of the Priority Sector Lending Certificate (PSLC) sale during the current quarter itself,” he said.

Asked about impact of moderation in interest rates, Raju said, main concern for the ongoing financial year would be Net Interest Margin (NIM) and the guidance of 2.75 per cent seems difficult at the current juncture due to 100 basis point rate cut by the RBI so far this year and expectation of another one as inflation has come down below 3 per cent. Whether the rate cut happens in August or October policy, one has to wait and watch, he said, adding, therefore pressure would be there in the current quarter as well and slight improvement can be witnessed in Q3 and Q4.