India’s Axis Bank bets on MSME, shorter-term loans to boost corp credit

MUMBAI, Nov 18 (Reuters) – Axis Bank ( AXBK.NS ), India’s third-largest private lender, which focuses on medium-sized business loans and working capital loans, will move measures from longer term loans and chunkier loans depending on the business. said Friday.

“On the business side, the business is larger, the loan term is longer than before. We are moving to a larger amount of financing or short term to reduce risk,” said Rajiv Anand, chairman of Axis Bank. an interview.

“I believe that MSME credit (medium and small and micro enterprises) in the next ten years, what the shops were in the last years.”

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The MSME segment accounts for 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 medium business by 49%.

Lenders are seeing demand for capex growth, apart from working capital, a sign that investments are picking up.

“The economy is very good, the credit landscape is good and corporate bonds are recovering, so we don’t see much of a problem in the short term,” Anand said.

“We are good at the sectors we focus on.”

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

But Anand said the problem will ease now that new businesses are looking to borrow from banks.

And while credit growth is up, deposit growth is low. Lenders saw loan growth of around 17%, while deposit growth was 8.25% as of Nov.

To increase its deposits, Axis Bank has increased its focus on business payment accounts and is pushing to improve productivity at each branch, Anand said.

CITI DEAL “ON TRACK”

Axis Bank said in March it would buy Citigroup Inc’s retail banking arm for $1.6 billion to strengthen its credit card and retail business.

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“Going forward, we expect to close in the first quarter of the next calendar year.

Some analysts have speculated that Citi’s credit card business has weakened in recent months, which could lead to a price cut, but Anand dismissed the comments.

“The numbers are broad with expectations. So this myth that the numbers are falling is not true.”

Presented by Nupur Anand; Edited by Savio D’Souza

Our principles: The Thomson Reuters Trust Principles.

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