Amitabh Chaudhry, MD and CEO, Axis Bank
| Photo Credit:
KSL
Private sector lender Axis Bank is considering selling a minority stake in its non-bank arm Axis Finance to fuel the latter’s growth ambitions and to comply with regulatory guidelines, MD & CEO Amitabh Chaudhry told businessline in an exclusive interaction.
“…Yes, there is a capital raising plan which is on at this stage. Right now, the intention is to raise enough capital to meet AFL’s (Axis Finance’s) growth requirements. That does not require us to dilute a major stake. We will continue to own a majority stake,” the MD said.
“There are 2-3 things at play. The final guidelines may be issued with a clear mandate on common areas of business, etc. Further, according to the company’s growth projection, the NBFC should come under the upper layer category, after which we will have to go for IPO within the prescribed timeline,” he added.
According to the Reserve Bank of India’s draft circular on Forms of Business and Prudential Regulation for Investments, banks have to ensure that there is no overlap in the lending activities undertaken by them and their group entities. Further, the RBI plans to tighten norms regarding banks’ equity investment in any company, including group entity. Essentially, the central bank said only a single entity within a bank group (the bank and its group entities) can undertake a particular form of permissible business.
In case the final circular is similar to the draft guidelines, Chaudhry said the bank will have two options. “One is that we come down below a certain stake. Or we absorb it completely with the bank. Again, given the size of that company, absorbing it may not make sense; that is why we are looking to raise minority capital,” he said.
Axis Finance offers retail, wholesale and MSME loans. Its assets under finance stood at ₹39,079 crore as of March 2025, up 22 per cent on a year-on-year basis. The NBFC’s profit after tax for FY25 stood at ₹676 crore, as against ₹610 crore last fiscal.
Axis UK
Axis Bank is also looking to shut down its Axis UK unit due to the small size of business and limited business growth.
“We are in the process of shutting down Axis UK. We had a small business there and took a strategic call a couple of years back that growth in that business is limited, and the costs are quite high. We had set it up with an intention to deal with Indian companies’ overseas operations, but due to our sovereign rating, there were limitations on what we could do. Most of the capital has been repatriated. We can do a lot of international operations from Gify City itself. We have among the largest operations in GIFT City,” he said.
Published on April 29, 2025
