Tag: axis bank

Sensex jumps 214 points in early trade; Nifty tops 17,220, BFSI News, ET BFSI

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MUMBAI: Equity benchmark Sensex jumped over 214 points in early trade on Thursday, tracking gains in index majors HDFC twins, Reliance Industries and Maruti amid largely positive cues from Asian peers.

The 30-share index was trading 214.43 points or 0.37 per cent higher at 57,899.22 in initial deals. Similarly, the Nifty rose 53.95 points or 0.31 per cent to 17,220.85.

M&M was the top gainer in the Sensex pack, rising 2.38 per cent. HDFC, PowerGrid, Titan, Sun Pharma, Maruti, HCL Tech and Reliance Industries, were among the other gainers.

On the other hand, L&T, ICICI Bank, Nestle India, Axis Bank and Tech Mahindra were among the losers.

In the previous session, the 30-share BSE Sensex rallied 619.92 points or 1.09 per cent to close at 57,684.79. Similarly, the NSE Nifty surged 183.70 points or 1.08 per cent to 17,166.90.

Elsewhere in Asia, bourses in Shanghai, Hong Kong and Seoul were trading with gains in mid-session deals, while Tokyo was in the red.

Stock exchanges in the US ended with losses in the overnight session.

International oil benchmark Brent crude rose 1.07 per cent to USD 69.61 per barrel.

Meanwhile, India’s merchandise exports rose 26.49 per cent year-on-year to USD 29.88 billion in November on better performance by key sectors, while the trade deficit hit a record high of USD 23.27 billion as imports of crude oil and gold spiked.

Foreign institutional investors (FIIs) remained net sellers in the capital market, as they sold shares worth Rs 2,765.84 crore on Wednesday, as per exchange data.



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SAT quashes NSE’s directive to Axis Bank in Karvy case, BFSI News, ET BFSI

Banking & Finance

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New Delhi, In a relief to Axis Bank, the Securities Appellate Tribunal (SAT) has quashed a direction issued by NSE that funds lying in the bank account of Karvy Stock Broking are the assets of the exchange’s defaulter committee. The order came after Axis Bank challenged the communication issued on December 8, 2020 by NSE holding that the bank accounts of Karvy become the assets of the defaulter committee of the exchange since the stock broker has been declared a defaulter and expelled from the membership of the bourse.

Axis Bank challenged the communication on the ground that the exchange has no power to issue any directions to the bank to freeze its accounts on which the lender has a banker’s lien.

It also contended that Axis Bank is a commercial bank and not a trading member and therefore is not bound by Sebi laws, including the bye laws of the National Stock Exchange of India Ltd (NSE).

“We are of the opinion that respondent no.1 (NSE) had no jurisdiction to hold that the funds lying in the account of Karvy Stock Broking Ltd are assets of the committee as per…NSE bye laws,” SAT said in an order on Monday.

Citing NSE bye laws, the tribunal said the vesting of the assets in the defaulters committee is limited and cannot include all the assets of Karvy, the defaulter. Only such security deposited with the stock exchange vests with the defaulters committee.

In addition, other monies, securities and other assets due, payable or deliverable to the defaulter by any other trading member also vest with the defaulters committee, it added.

“The bye law 12 makes it apparently clear that a defaulter committee can only issue directions against the trading member and cannot issue any direction to a third party, namely, the appellant (Axis Bank) who admittedly is not a trading member,” SAT noted.

It further said NSE does not get any jurisdiction to pass such order based on Sebi’s confirmatory order.

The confirmatory order asked NSE to initiate appropriate action against Karvy for violation of its bye laws. It also allowed the exchange to invite and deal with claims of the clients in accordance with its bye law, the tribunal noted.

“The impugned communication issued by NSE dated 8th December, 2020 invoking bye law 11 of its bye laws is totally without jurisdiction and is quashed,” SAT said.

It was alleged that in the course of its banking business, Axis Bank had granted several credit facilities to Karvy, which owed Rs 165 crore alongwith interest to the lender.

Also, it is alleged that on January 27, 2021, Axis Bank had Rs 8.27 crore in the bank account and fixed deposit accounts of the lender. Of the Rs 8.27 crore, a sum of Rs 7.98 crore was the exclusive property of Karvy and the balance amount of Rs 28.66 lakh belonged to clients and other parties.

Sebi, through an interim order in November 2019, put several restrictions on Karvy, including prohibiting the brokerage from taking new clients in respect of its stock broking activities as it had misused clients’ securities by unauthorisedly pledging the securities.

Among others, the regulator had directed the stock exchange to initiate appropriate action against Karvy for violation of bye laws. This order was confirmed by the regulator in November 2020.

Further, Karvy was declared a defaulter in November 2020 under the bye laws of NSE and was accordingly dismissed from the membership of the exchange as a trading member. PTI SP ABM ABM



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HDFC, Axis Bank sold Reliance Capital debt facilities to ACRE, BFSI News, ET BFSI

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A few months before the Reserve Bank of India (RBI) superseded the board of Reliance Capital (RCap), Ares SSG Capital-backed Assets Care & Reconstruction Enterprise (ACRE) acquired debt facilities from HDFC and Axis Bank at 27-28 paise on a rupee.

ACRE, an asset reconstruction company, purchased a ₹524-crore term loan from housing finance company HDFC Ltd and a ₹100-crore term loan and ₹490-crore non-convertible debentures (NCDs) from Axis Bank, the people said. Both trades were carried out on an all-cash basis, one of the persons cited above said.

HDFC and Axis Bank were the only two lenders that had provided term loans to RCap, according to the company’s annual report for the financial year March 31, 2021.

The Anil Dhirubhai Ambani Group-promoted finance company has total liabilities of ₹19,123 crore.

Axis Bank sold two 8.85% NCDs maturing in 2026 amounting to ₹488.2 crore and one 9% NCD maturing in 2026 of ₹1.85 crore to Assets Care & Reconstruction in the secondary bond market in October.

Default Category
The trade with HDFC was concluded in June, the people cited above said. HDFC had an outstanding loan of ₹524 crore and interest overdue of ₹79 crore as of March 31, 2021.

HDFC, Axis Bank and ACRE did not respond to the request for comment. The debt facilities of RCap were downgraded to D – indicating default category – in September 2019 by CARE Ratings, when it missed payments on NCDs.

RCap, having been in default for over two years, saw its board superseded on Monday. In a statement, RBI said it had done this given the “defaults by Reliance Capital in meeting the various payment obligations to its creditors, and serious governance concerns, which the board has not been able to address effectively.” The company’s total liabilities include NCDs of ₹16,260 crore, term loans of ₹625 crore and inter-corporate deposits of ₹561 crore. It has also issued a corporate guarantee of ₹1,677 crore.

In June last year, ET reported that Deutsche Bank had purchased ₹565 crore of Reliance Capital bonds at a discount of 70% in the secondary market through seven transactions.

RBI will approach the National Company Law Tribunal between Friday and Monday to admit the finance company for corporate insolvency resolution process, one of the persons cited above said. Y Nageswara Rao, a former executive director at Bank of Maharashtra, has been appointed administrator of RCap. The ADAG-promoted Reliance Capital is registered as a core investment company with RBI, with investments in general and life insurance, asset management, stockbroking, housing finance, wealth management and asset reconstruction.



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Axis Bank’s Thapar, BFSI News, ET BFSI

Banking & Finance

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Misconfiguration is one of the key risks to cyber attacks, said Rajesh Thapar, the chief information security officer of Axis Bank. Banks may bring in the best tool or technology but if it isn’t configured right, you are opening doors to cyber risks, he added.

Banks are facing an unprecedented surge in cyber attacks, and the nature of these attacks are constantly evolving the complex theft landscape.

While ransomware attacks, Denial of Service (DOS) attacks, phishing are common, with more digitalisation, the nature of such attacks is changing.

“Cyber risk is now becoming a business risk. Earlier cyber risk was a cyber risk from infrastructure perspective but today, with all the digitalisation happening, cyber risks are more becoming a business risk as it can impact a customer’s confidentiality which can lead to customer distrust. It can impact regulations, the company can be non compliant to some of the legislations and get penalties for it “, added Thapar.

Balancing customer experience alongwith security in an organisation is necessary yet complicated. Now, there is a huge pool of data, which needs to be protected and this data is the first target for hackers.

Manish Sinha, director sales engineering, India and SAARC at McAfee Enterprise, said “The risk is not just hackers attacking these data threads, the threat is them selling it away to third parties, which is more harmful to the organisation in all ways. Data leakage is a serious concern. To battle it what’s required is a unified approach for data protection in a holistic manner across the banking platforms.”

Misconfiguration a key risk to cyber attacks: Axis Bank's Thapar

Cyber attackers and hackers are being very sophisticated now in their attacks. The average dwell time of these hackers in the network, before being discovered, is increasing. More the dwell time, greater the damage, making time a very critical factor of the extent of cyber attacks.

“Security operation models are evolving. The identification and prevention of cyber threats and attacks were in a periodic cycle of assessments but now it will be in a continuous cycle of assessments. Attacks are happening all the time so organisations will need to carry out the continuous assessment model to beat cyber threats and attacks”, said Thapar.

Talking about the future model to control cyber attacks, Sinha said that the bigger challenge for the next generation cyber security teams is to prioritise the threats after identifying it. “This should come from alot of AI based engines or algorithms, which are running, and also from global threat intelligence, which can relate to the threat actors from the banking space globally, and finally look out to the regional advisories,” he said.



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Axis Bank EVP, BFSI News, ET BFSI

Banking & Finance

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Axis Bank‘s digital penetration has risen to over 70-73%, but it does not see a future without bank branches soon.

“It will probably take another one generation shift, for us to you know sort of planning a strategy in which there is sort of absolutely no branches. But yes, goes without saying that the intensity of branch expansion has sort of come down dramatically now from what it used to be,” Avinash Raghavendra, EVP and Head of Information Technology of Axis Bank, said at the fireside chat, with Amol Dethe, editor of ETBFSI, during the three-day event – ETBFSI Converge.

A bank branch is more like an engagement hub, where customers can come and if they have some essential queries.

“We have 4,500 plus branches and this presence and the reach actually gives visibility in the customers’ mind which any other medium or advertisement will probably not be able to do perform. Somebody taking a home loan would preferably like to deal with an entity whom they have seen. There is a new age of customers millennial customers who are thinking very differently about it, that is where all the digital property is coming into the picture,” he said.

Digital shift

5,000 sq ft to 5 inch is definitely happening, he said, adding, “If you are talking about an inflexion point in 5-6 years people will rarely visit branches. The new next generation will not like to walk into any of the branches.”

Most of the bank’s fixed deposit openings, over 70% of savings bank account openings are coming from digital channels.

“This shift has happened some years back. I mean as far as doing your fund transfer and doing your transaction kind of a thing that shift has also happened,” he said. Right now, the bank is focusing on some of the servicing issues for a lot of customers who used to come to the branch for as basic as updating Aadhar or change of address.”Avinash Raghavendra, EVP and Head of Information Technology of Axis Bank

The only customers these days who are mostly visiting the branches is someone with a locker service because that is a physical kind of a property.

On apps

Axis Bank app has a ‘Do It Yourself’ kind of a feature that allows for 250 plus transactions. “So that’s a very large number, and given the fact that our digital customer base is 73% plus, these customers are seeing traction when it comes to whatever we enable for them on the mobility side,” he said.

Credit card and debit card usage rules, which now RBI has also sort of mandated, have been incorporated inside the app, he said.

The bank engages with UIUH experts and internally has a UX team that does a lot of work.

“We do take a lot of feedback from customers in terms of what features they want. What we have seen there is 20% of features that is used by 80% of customers, so these services should be easily made available to the customers. We are also trying to come with as much of personalisation. Like reminder for FD maturity, basically, providing some sort of intelligent nudges, instead of getting them searching got those particular options,” he said.

On the super app, he said, there is very little that we are not offering in the app at the moment. “Super app is mainly for conglomerates who are doing different kinds of thing. As we are going more and more digital it is actually shaping a personal advisory kind of a function,” Raghavendra said.



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Private banks lead, overall NPA provisioning falls in Q2, BFSI News, ET BFSI

Banking & Finance

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The worst seems to be over for banks in the pandemic, going by the drop in bad loan provisioning numbers. The bad loan provisioning by banks fell sequentially for the second consecutive quarter in the three months ended September 2021, led by a significant drop in some of the private sector banks. The trend is likely to continue on account of improved collections and lower slippages.

The aggregate provisioning towards non-performing assets (NPA) or loan loss provision for a sample of 29 banks fell by 20.5 per cent sequentially and 10.9 per cent year-on-year to Rs 30,400 crore. It has softened over the past two quarters after peaking at Rs 65,986.9 crore in the March 2021 quarter when banks resumed accounting for slippages.

Private banks at the forefront

The fall in the September quarter was driven by a sharp 43.9 per cent drop in loan loss provisioning by the private sector banks at the aggregate level. Top banks including HDFC Bank, Axis Bank, Kotak Bank, and IndusInd Bank recorded a double-digit sequential drop in the NPA provisioning.

The public sector banks on the other hand reported a modest 1.6 per cent fall in the NPA provisioning. Their share in the sample’s NPA provisioning increased to 68.5 per cent from 55.3 per cent in the previous quarter.

Analysts expect the asset quality of banks to improve gradually in the coming quarters following a pick up in economic activity and recovery in collections.

“Banks slippage ratios reduced substantially by 100 basis points QoQ on an average in the September quarter. The asset quality situation is likely to improve further driven by a reduction in retail as well as SME nonperforming loans in the coming quarters,” a Macquarie Capital Securities (India) note said.

The banks’ net interest income increased by 3.7 per cent sequentially and 2.4 per cent year-on-year to Rs 1.3 lakh crore. The sequential growth was faster for PSU banks at 5 per cent compared with 2.1 per cent for the private sector banks.



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Real capex will revive in 9-12 months. says Axis Bank CEO Amitabh Chaudhry, BFSI News, ET BFSI

Banking & Finance

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Even as large corporations firm up greenfield and brownfield investment plans, Amitabh Chaudhry, CEO, Axis Bank, believes that real capex will revive in the next 9-12 months and will signal the revival of credit offtake. Chaudhry, who was reappointed as MD of the bank for another three years, tells Saloni Shukla that he had pivoted the bank toward a better quality franchise and the bank would soon catch up with the NIMs and RoAs reported by the likes of ICICI Bank and HDFC Bank. Edited excerpts:

What’s your view on the Indian economy? Is it on the mend?
The festive season has been better than what was expected. Optimism is returning, there have been a lot of conversations around incremental capex which will take place soon. Some of them have announced investment plans but the real capex will start coming in only in the next 9-12 months when the credit offtake will start. On the government side, earlier only a couple of areas were spending like defence and infrastructure but I am now told other departments are also being pushed to spend. The GST and tax collections are looking good, so the government has some spare money to spend.

What are the signs of concern for you?
Yes, there are signs of worry. While the third Covid wave has not come as expected after the festive season, some concerns remain on that front. On the upside, 57% of the population has got at least the first dose of vaccination. But we do see the fourth wave in Europe, so you cannot ignore that fact. We are hearing of shutdowns for unvaccinated people.

Plus there are supply chain issues, this is impacting India also especially the car industry. My impression is it could go on for another 12 months. Commodity prices remain high. Geo-political issues are worrisome, especially what is happening between the Western world and China.

What kind of capacity utilisation are you seeing and which sectors would see capex pick up?
The capex conversations are coming from infrastructure sectors and those supporting them. India’s exports are up 55%, so some of the industries which are reliant on exports also have a lot of capex coming through. Generally, as capacity utilisation starts touching 70-75%, they do need to start planning for capex as it doesn’t come overnight. My view is that once the supply chain issues in the auto industry go away that will also see demand pick up. On the service side, the bigger players have raised a lot of capital; so when things open up they could acquire assets at cheaper rates.



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Inside Freecharge’s neo banking gameplan

Banking & Finance

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In its mission to become a personalised comprehensive digital bank or neobank, Axis Bank-owned fintech Freecharge has started phased closed user group (CUG) testing of the product with over 18,000 organic users sign-ups. The neobank is scheduled to launch in the fourth quarter of the current fiscal and will be having several personalised features to keep the user engaged including financial goal management, financial scores to analyse financial stability and a spend analyser to help track expenses.

“Freecharge will become a comprehensive financial services platform. In the first phase, we launched our buy now pay later (BNPL) product in the first quarter, which has been growing 40X QoQ. In the second phase, in October, we started the lending product. And now, the focus will be the launch of the neobank in the next few months,” Siddharth Mehta, CEO, Freecharge, told BusinessLine in an exclusive interview.

The neobank will show up as a separate section within the Freecharge app.

Comprehensive suite

Targeted at the 22-32 age group of salaried professionals, the neobank will be providing a host of services including fixed deposits, lending, BNPL, digital credit cards, and investing options like mutual funds and digital gold in one app.

The app’s in-house built proprietary software will enable value-added features such as goal management, financial score to gauge how financially stable and healthy you are what you need do more, and spend analyser.

Also see: Axis Bank inks pact with Army Insurance Group for retail mortgage loans

What’s interesting is these ultimately will become a part of Axis Bank’s universe, helping the bank strengthen its portfolio of products and even cross-sell them across the two platforms. Entering slightly late into the market, this, Mehta said, will be a key USP (unique selling proposition) among existing neobanks such as Niyo, Fi, Open, Jupiter, Avail Finance and many more.

“Being a subsidiary of a trusted bank like Axis Bank is the biggest advantage to Freecharge as compared to any other neobanks. We are able to provide comprehensive suite not only of products but also services. If I am onboarding the customers through my neobank, the parent bank has all the capabilities to profile the customers, and build products that we can cross-sell across the two entities,” he said.

‘Evolving banks’

Speaking of having agility as a part of a legacy bank over a new-age fintech, he added, “Banks are evolving very fast on digital. I would like to call them evolving banks instead of ‘legacy’. In the next two years you will see them work in a very different way. For instance, Axis has built a new cloud-first platform called Jarvis for digital lending. It’s agile and working real-time, even the technology updates. The ability of launching an end-to-end digital lending platform and to be able to optimise it regularly clearly shows that the banks are agile and moving fast.”

Lending proposition

Freecharge, along with Axis Bank, is currently working on creating a merchant lending product with daily EMI and a daily investment product. Overall, at Freecharge’s level, the focus going forward will be on building a strong lending proposition.

Also see: ‘Bank-backed brokerages keep losing market share to discount brokers’

Freecharge will launch its personal B2B loan product in another two months, which will have a tenure of 12 months. Borrowers will be offered loans of ₹3,000 to 100,000 depending on their profiles, at an interest rate of 24-30 per cent. This product will be focussed on merchants having one or two stores and not the larger SMB ecosystem, Mehta said. While BNPL comes at zero interest rates, there will also be another consumer loan product of ticket size of ₹500-10,000 at 15 to 20 per cent interest.

“We want to add at least a million accounts three years from launch for the neobank,” Mehta added.

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Axis Bank inks pact with Army Insurance Group for retail mortgage loans

Banking & Finance

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Axis Bank on Wednesday signed an MoU with the Army Insurance Group (AGI) to offer retail mortgage loans to the Indian Army.

“The bank will offer best-in-class products and services to defence personnel to cater to their home loan requirements,” it said in a statement.

Through this partnership, it will exclusively offer higher loan amounts as well as the facility to transfer the balance of their loans from AGI to Axis Bank.

“As all Army personnel are entitled to draw pension, the borrowers can also extend the repayment period beyond their retirement, thus enabling them to borrow higher loans,” it further said.

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Credit card spends sparkle on festive rush in October, November, BFSI News, ET BFSI

Banking & Finance

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Credit card spends are seen hitting record highs in October and November as the COVID-19 wave ebbs and festive euphoria sets in. As per trends, it has grown 17 per cent in October and 11 per cent in November.

Spending traction is evident from the record absolute spends and the ratio of credit card to debit card spend, which stands at 1.28x. October is likely to be 15-18% better than September while November’s first-week run rate has been better than October, according to ICICI Securities.

September jump

Credit card spends jumped 60 per cent year-on-year (YoY) in September, helped by the onset of the festive season. However, on a sequential basis the growth slowed down to 3 per cent at Rs 80,500 crore in September.

Spends grew strongly at 60% year on year (+16% on a two-year CAGR basis). Kotak Mahindra Bank reported the highest growth (27% MoM) in September, followed by IndusInd Bank and ICICI Bank (13% each).

Other major players reported growth in the +-4% range. On a two-year CAGR basis, spends for ICICI Bank grew 58%, IndusInd 33%, Kotak Mahindra Bank 29%. HDFC Bank and SBI Cards posted growth of 10–15% and Axis Bank and SCB 2–3%. On the other hand, Citi and Amex saw declines of 8% and 26% respectively. ICICI Bank surpassed SBI Cards to become the second-largest player in spends, with market share of 19.3% over 6MFY22.

Outstanding credit cards up 10.8%

The total number of outstanding credit cards in the system grew 10.8% YoY to 65 million in September 2021 – the highest in the past 11 months. Among the major players, ICICI Bank reported strong growth of 26.1% YoY, followed by IndusInd Bank (15.6%), SBI Cards (14.3%). Foreign players such as American and Citi witnessed decline of 10% and 5% respectively. SBI Cards and ICICI Bank continued to perform strongly, resulting in a 59–218 bps YoY increase in market share to 19.3% and 18.0% respectively in September.

ICICI Bank added close to 2 million new cards in the past 10 months, taking its credit card base to 11.6 million as of September. Despite a 247 bps year on year decline, HDFC Bank remained the largest player with a market share of 23.0%.

Around 10.91 lakh new cards were added to the system in September with HDFC Bank being the largest acquirer at 2.44 lakh cards.



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