Axis Bank is evaluating options to increase its stake in Axis Max Life up to 30%, a move aimed at facilitating the eventual listing of the insurer, Managing Director and CEO Amitabh Chaudhry said in an interview with NDTV Profit. Any such expansion, however, remains subject to regulatory clearance from the Reserve Bank of India (RBI).
Currently holding a 20% stake in the life insurance venture, the private lender is exploring restructuring that could involve merging the holding company with the operating life insurance entity. The comments came on the sidelines of operational trajectory, deposit growth, and balance sheet performance as Axis Bank rolled out its annual customer-outreach initiative.
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"We have indicated that at some stage we would like to merge the holding company and Axis Max Life. Even the regulator is pushing us to get the listing of the insurance company done, and this is a very neat way of achieving it," Chaudhry said. "For that, you do need a promoter with at least a 26% stake. So, we are evaluating various alternatives. Before we do anything, we will need the permission of our regulator to increase our stake."
Capitalizing On FCNRB Inflows, Margin Trajectory
Addressing market curiosity surrounding foreign currency non-resident (FCNRB) deposits and the overseas foreign currency borrowing swap window, Chaudhry noted that Axis Bank ranks among the top institutions in funds mobilized through the facility. While declining to disclose specific figures ahead of official earnings disclosures, Chaudhry confirmed the bank's share of these inflows sits well above its domestic deposit market share of roughly 5%.
On the impact of these sizable inflows on profitability:
- Short-Term Dilution: Rapid deployment of substantial foreign currency funds into interim instruments like government securities or wholesale lending may cause Net Interest Margins (NIMs) to wobble, move sideways, or dip over the next one to two quarters.
- Medium-Term Accretion: Over time, the low-cost liquidity will be utilized to replace more expensive deposits and fund credit growth, rendering the inflows net-additive to margins.
- Trough Reached: Chaudhry reiterated that, excluding the temporary optics of deploying FCNRB funds, the bank's NIMs have already bottomed out following prior contractions.
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ECL Transition
On the banking sector's shift toward the expected credit loss (ECL) provisioning regime, Chaudhry expressed confidence in the lender's balance sheet resilience. Having maintained substantial countercyclical buffers-including provisions set aside following tax write-backs and unutilized COVID-era reserves-he projected the transition's capital hit to net worth would remain limited for Axis Bank. Over the past three years, Axis Bank has expanded its branch network in Uttar Pradesh by 68%, supporting the state's drive toward a trillion-dollar economy across industrial corridors, tourism, and micro-enterprises.
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