Axis Bank India ventures into MSME, short-term loans to boost corporate credit | Techy Kings

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By Nupur Anand

MUMBAI, Nov 18 (Reuters) – Axis Bank, India’s third-biggest private lender, will focus on corporate mezzanine and working capital loans, moving away from longer term loans and larger infrastructure-related loans, a top executive said on Thursday. Friday.

“In the corporate side, we were more infrastructure, long-term loan focus earlier. We are now moving to be more working capital or short-term loan focus to reduce risk,” said Rajiv Anand, deputy managing director of Axis Bank, in an interview.

“I believe that MSME (medium and small and medium enterprise) loans will, over the next decade, be the same as retail was in the previous decade.”

The MSME segment comprises about 20% of Axis’ loan book at present, Anand said.

The bank’s corporate loan book grew by 13% in the September quarter, while its SME book grew by 28% and its mid-corporate business by 49%.

Lenders see demand for capex growth, apart from working capital, an indicator that investment is picking up.

“The economic environment is very conducive, the credit environment is good and corporate balance sheets are down, so we don’t see many challenges in the short term,” Anand said.

“We are quite positive on the segment we are focusing on.”

In recent months, lenders, including Axis Bank, have raised the issue of corporate loan mispricing as a group of banks pursues several opportunities to boost credit growth.

But Anand said the issue is easing as more and more corporates are seeking loans from banks.

And while credit growth has picked up, deposit growth remains low. Lenders saw credit growth of around 17%, while deposit growth stood at 8.25% on November 4, the latest central bank data showed.

To increase its deposits, Axis Bank has renewed its focus on corporate salary accounts and is working to improve productivity at every branch, Anand said.

CITI OFFER “ON THE ROAD”

Axis Bank had said in March it would buy Citigroup Inc’s domestic consumer banking arm for $1.6 billion to boost its credit card and retail businesses.

“The guidance is that we aim to close in the first quarter of the next calendar year. We are well on track to meet that timeline,” Anand said.

Some analysts have suggested that Citi’s credit card business has shrunk in recent months, which could account for the price drop, but Anand dismissed that suggestion.

“The numbers are generally in line with expectations. So, this narrative that the numbers are down is not true.” (Reporting by Nupur Anand; Editing by Savio D’Souza)

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