MUMBAI, Nov 18 (Reuters) – Axis Bank ( AXBK.NS ), India’s third-largest private lender, will focus on loans to mid-sized and operating companies, moving away from long-term loans and infrastructure-related loans, a senior executive said. said on Friday.
“Within the corporate side, we had more infrastructure, long-term loans were more concentrated before. Now we are looking to have more working capital or short-term loans to reduce risk,” said Rajiv Anand, deputy director of Axis Bank, in an interview.
“I believe that MSME (medium, small and medium enterprises) lending will, in the next decade, be what it was in the last decade.”
The MSME segment forms about 20% of Axis’ loan book at present, Anand said.
The bank’s corporate loan book increased by 13% in the September quarter, while its SME book grew by 28% and its medium-sized business by 49%.
The lender sees a need for capex growth, excluding working capital, which is an indication that investment is picking up.
“The economic situation is very good, the credit environment is not good and corporate balance sheets are being reduced, so we don’t see a big challenge in the short term,” Anand said.
“We are very optimistic about our focus areas.”
In the past few months, lenders, including Axis Bank, have raised the issue of corporate debt defaults as a number of banks are chasing fewer opportunities to boost credit growth.
But Anand said the issue is becoming easier as more companies seek to borrow from banks.
And while credit growth has picked up, deposit growth remains low. Lenders saw credit growth of about 17%, while deposit growth was at 8.25% as of November 4, the latest central bank data showed.
To increase its deposits, Axis Bank has renewed its focus on corporate income accounts and is pursuing productivity improvements at each branch, Anand said.
CITI DEAL “ON TRACK”
Axis Bank said in March it would buy Citigroup Inc for $1.6 billion to strengthen its credit card and retail businesses.
“The direction has been that we aim to close in the first quarter of the next calendar year. We are well on our way to meeting those times,” said Anand.
Some analysts have suggested that Citi’s credit card business has slowed in the past few months, which may have led to the price cut, but Anand dismissed these suggestions.
“The numbers are broadly in line with expectations. So, this narrative that the numbers are going down is not true.”
Reported by Nupur Anand; Edited by Savio D’Souza
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