India’s third-largest private sector lender, Axis Bank, is setting its sights on dominating the acquisition financing segment, a space that the Reserve Bank of India ( RBI) has recently indicated it may soon open up to domestic banks.
Amitabh Chaudhry, Managing Director and CEO of Axis Bank, outlined the bank’s ambitions to become the premier partner for corporate India across lending and acquisition financing, directly challenging the long-standing dominance of foreign lenders in this area.
“We want to bank with all the major corporates in India,” Chaudhry said on the sidelines of the Global Fintech Fest in Mumbai. “We are the biggest players in bond and loan syndication. We will give all the foreign banks a run for their money who have been financing these acquisitions for the last several years.”
Chaudhry also said that the while the private credit segment is growing, it is still too small to challenge traditional banks on large-ticket deals.
“Private credit is not a competition. It’s too small in India at the moment,” he said.
The RBI recently signalled that it would soon release a comprehensive framework to allow banks to finance acquisitions by Indian corporates, a long-standing demand from the domestic banking sector. Currently, while foreign banks and non-banking financial companies (NBFCs) can offer acquisition financing, domestic banks are restricted from providing loans for the purchase of shares.
On the issue of Axis Bank’s wholly owned NBFC subsidiary, Axis Finance, Chaudhry said the bank is awaiting the final form of the RBI’s upcoming circular before making decisions on a planned stake sale.
Recently, the RBI announced that it would withdraw a proposal to prohibit any business overlap between banks and their group entities, a move that removes a key regulatory overhang for banks with NBFC arms operating in similar lines of business.
“The circular is not yet out, but the sense I get is that they (RBI) will give more time to manage this whole process rather than push us to sell in a shorter period of time,” he said. “Directionally nothing might change.”
He added that Axis Bank is in no rush to conclude the transaction.
“Obviously we will first check the circular,” he said. “We haven’t reached a stage in the transaction that we are closing it tomorrow. It’s a minority stake sale, the amount that we are trying to raise is only for minority stake. We have to raise money, we are in the process of raising money.”
The bank is exploring a strategic sale to private equity investors, with a potential IPO of Axis Finance under consideration at a later stage.
Amitabh Chaudhry, Managing Director and CEO of Axis Bank, outlined the bank’s ambitions to become the premier partner for corporate India across lending and acquisition financing, directly challenging the long-standing dominance of foreign lenders in this area.
“We want to bank with all the major corporates in India,” Chaudhry said on the sidelines of the Global Fintech Fest in Mumbai. “We are the biggest players in bond and loan syndication. We will give all the foreign banks a run for their money who have been financing these acquisitions for the last several years.”
Chaudhry also said that the while the private credit segment is growing, it is still too small to challenge traditional banks on large-ticket deals.
“Private credit is not a competition. It’s too small in India at the moment,” he said.
The RBI recently signalled that it would soon release a comprehensive framework to allow banks to finance acquisitions by Indian corporates, a long-standing demand from the domestic banking sector. Currently, while foreign banks and non-banking financial companies (NBFCs) can offer acquisition financing, domestic banks are restricted from providing loans for the purchase of shares.
On the issue of Axis Bank’s wholly owned NBFC subsidiary, Axis Finance, Chaudhry said the bank is awaiting the final form of the RBI’s upcoming circular before making decisions on a planned stake sale.
Recently, the RBI announced that it would withdraw a proposal to prohibit any business overlap between banks and their group entities, a move that removes a key regulatory overhang for banks with NBFC arms operating in similar lines of business.
“The circular is not yet out, but the sense I get is that they (RBI) will give more time to manage this whole process rather than push us to sell in a shorter period of time,” he said. “Directionally nothing might change.”
He added that Axis Bank is in no rush to conclude the transaction.
“Obviously we will first check the circular,” he said. “We haven’t reached a stage in the transaction that we are closing it tomorrow. It’s a minority stake sale, the amount that we are trying to raise is only for minority stake. We have to raise money, we are in the process of raising money.”
The bank is exploring a strategic sale to private equity investors, with a potential IPO of Axis Finance under consideration at a later stage.
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