MUMBAI: Canara Bank expects no material financial hit from its exposure to Rajesh Exports, newly appointed managing director and chief executive officer Brajesh Kumar Singh said, seeking to reassure investors after a probe by Securities and Exchange Board of India (Sebi) put the jewellery exporter under scrutiny.
Rajesh Exports, among India's largest gold processing companies, is facing allegations of inflating its consolidated revenues by more than ₹15 trillion over five years by attributing massive revenues to overseas subsidiaries, according to findings of a Sebi probe. The account has been closely watched by investors given the size of the company's historic banking relationships.
Canara Bank's exposure to Rajesh Exports stood at ₹509.37 crore, according to a bid document issued by the lender in May 2026. The bank had put up the stressed loan account for sale through an auction process, seeking bids on a 100% upfront cash basis. The document described the account as a stressed loan exposure arising from defaults by Rajesh Exports on its debt obligations.
Singh said the bank's remaining exposure is fully provided for and is therefore not expected to have any material impact on Canara Bank's financials. The lender has already recovered a substantial portion of the dues and remains hopeful of further recoveries. "As of now, we are very comfortably placed," Singh told Mint in an interview.
The chief executive repeatedly emphasized that the bank is unlikely to suffer losses on the account. He also rejected concerns that the issue reflected weaknesses in Canara Bank's underwriting standards, saying the dispute was linked to volatility in foreign-exchange markets rather than lending decisions.
“It was not underwriting concerns as such,” he said. “It was only due to some amount of volatility in the rupee market.”
The Indian rupee had come under severe pressure amid foreign portfolio outflows and uncertainty linked to the conflict in West Asia, falling to a record low of 96.82 against the US dollar on 20 May.
When asked whether he remained hopeful of recovery, Singh said recoveries were already underway and additional upside remained. “They have already recovered,” he said. “We have got some salvage value there. Hopefully, we will be fully recovering.”
Beyond Rajesh Exports
The reassurance comes as Canara Bank enters FY27 with one of the cleanest balance sheets among public-sector lenders. The bank's gross non-performing assets ratio improved to 1.84% as of March 2026 from 2.08% in December 2025, while net NPA fell to 0.43% from 0.45% in the previous quarter.
Singh also highlighted the benefits of the Reserve Bank of India's latest FCNR(B) deposit measures. Canara Bank currently has FCNR(B) deposits of $969.6 million (about ₹9,418 crore), accounting for 0.65% of total deposits. The bank is targeting an additional $500-600 million mobilization, including $200-300 million from its NRI franchise in Kerala and Karnataka.
“Our hedging cost is around 3%. Even if we pass on half, we will be benefiting,” Singh said, adding that depositors could receive as much as 150 basis points of the benefit.
However, he cautioned that the impact on overall deposits and margins would not be significant enough to alter FY27 guidance.
The bank continues to guide for 11-12% loan growth, 9-10% deposit growth and net interest margins of 2.5-2.6% in FY27.
Global deposits rose 9.7% year-on-year to ₹15.69 trillion at the end of March, while advances increased more than 15% to ₹12.38 trillion. Canara Bank's net interest margin improved to 2.54% in the March quarter from 2.45% in the December quarter.
Just a week into his new role, Singh, who assumed charge on 1 June for a three-year term after succeeding K. Satyanarayana Raju, also outlined his strategic priorities for the bank, including artificial intelligence (AI), digital transformation, low-cost deposit mobilization and improving operational efficiency.
"My endeavour would be to amalgamate more artificial intelligence-led initiatives," Singh said. "We have to reduce costs and maximise income."
Canara Bank's cost-to-income ratio stood at 48.45% for FY26, while return on assets was 1.10%.
He said AI would increasingly be deployed in collections, early-warning systems, customer service and employee-assistance functions, while technology spending is likely to increase further during FY27.
On the government's recently announced emergency credit line guarantee scheme 2.0 for businesses affected by the West Asia conflict, Singh said Canara Bank has an eligible portfolio of roughly ₹22,000 crore and has already reached out to borrowers.
"It is a good thing for us also to increase our balance sheet and at the same time help MSMEs in these trying times," he said, describing the loans as a secured business opportunity.
So far, the lender has not seen companies seeking additional working capital due to higher freight costs or supply-chain disruptions, nor has it received any requests from airlines under the government-backed support framework.
The bank is also evaluating capital raising of around ₹4,000 crore during FY27 through the issue of tier-II bonds.
