MC Interview | CEO Satyanarayan Raju says Canara Bank is working to increase the value of CanFin Homes following the RBI's draft guidelines for aligning enterprises.

In an exclusive interview with Moneycontrol, Managing Director and Chief Executive Officer K Satyanarayan Raju stated that Canara Bank is striving to improve the valuation of its subsidiary CanFin Homes in response to the Reserve Bank of India's (RBI) draft circular on business and prudential regulation for investments. According to Raju, the circular's effects are limited to CanFin Homes; no other subsidiaries are carrying out the same activity in parallel with the bank. "We have informed everyone that we are trying to raise CanFin Homes' valuation. We anticipate that the upcoming quarters will see more positive outcomes. The RBI's draft proposal, which was made public on October 4, stated that a specific type of acceptable activity could only be conducted by one organization within a bank group. It stated that different organizations within a bank group are not allowed to engage in the same activities or get the same kind of license from any regulator of the financial industry. According to Raju, the bank has not made any investments in the telecom industry in the past two to two and a half years, but the lender has just made some investments in Jio. The draft guidelines issued by the Reserve Bank of India (RBI) aim to ensure streamlined operations and prevent overlapping roles within banking groups. By mandating that specific business activities be restricted to one entity within a group, the central bank seeks to enhance efficiency and governance in financial institutions. Canara Bank's proactive stance in aligning its subsidiary, CanFin Homes, with these regulations demonstrates the bank's commitment to maintaining compliance while exploring avenues to maximize the subsidiary's potential. Raju emphasized that Canara Bank is leveraging its expertise and resources to support CanFin Homes' growth trajectory. The bank is focusing on innovative strategies to enhance the subsidiary's valuation, including portfolio diversification and tapping into emerging housing finance opportunities. This move not only aligns with the RBI's prudential norms but also strengthens Canara Bank's overall market position as a responsible and forward-looking financial institution. Industry experts believe that Canara Bank's decision to concentrate its efforts on CanFin Homes is a strategic one. With the housing finance sector witnessing a steady rise in demand, especially in Tier 2 and Tier 3 cities, CanFin Homes is well-positioned to capitalize on this trend. By enhancing its valuation, Canara Bank can also improve its overall asset quality, as the subsidiary's growth directly contributes to the parent bank's consolidated performance. In light of the RBI's draft guidelines, other banks with similar subsidiaries are expected to re-evaluate their business models. The move aims to prevent conflicts of interest and ensure that banking groups maintain clear demarcations of their operational domains. For Canara Bank, the focus on CanFin Homes could serve as a blueprint for other institutions navigating the evolving regulatory landscape. This shift underscores the increasing importance of governance, compliance, and strategic alignment in India's banking and financial services sector