Axis Bank rises 1% after RBI greenlights Executive Director appointment

Shares of Axis Bank jumped nearly 1 percent in trade on August 18, post the approval of new Executive Director for the bank. At 12:33 pm the Axis Bank stock was trading 0.69 percent higher at Rs 942.45 on the NSE.

The Reserve Bank of India has approved an appointment of Subrat Mohanty as Executive Director of Axis Bank for three years, with effect from August 17, according to a filing with BSE. The bank has also launched two lending products i.e., Kisan Credit Cards and MSME loans to propel growth.

Details about the lending products

The private sector lender, on August 17, launched two lending products — Kisan Credit Cards and MSME loans — powered by the Public Tech Platform for Frictionless Credit (PTPFC), introduced by the Reserve Bank Innovation Hub (RBIH). RBIH is a wholly owned subsidiary of the Reserve Bank of India (RBI).

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Axis Bank will offer Kisan Credit Card (KCC) and unsecured MSME loans to small business customers, powered by the platform. The RBI had announced the launch of the pilot project for public tech platform for frictionless credit by facilitating a seamless flow of required digital information to lenders.

The newly launched products will be offered in a completely digital manner and require no submission of documents by customers. “As a pilot, Kisan Credit Cards will be offered in Madhya Pradesh and will be available to customers for up to Rs. 1.6 lakh to start with. MSME loans will be available across the country and will offer loans up to Rs. 10 lakhs to customers,” the bank said in a statement.

As part of the pilot, Axis Bank will leverage the PTPFC for accessing data for customers in a fully consented and secure manner. These include PAN validation, Aadhaar eKYC, Account Aggregator data, verification of land records, and penny drop service to validate bank accounts.

“Based on the learnings from this pilot, the bank will expand the scale of existing products and launch new products on the platform in a calibrated manner. The products will be available in both self-serve and assisted mode, to enable maximum reach and support to customers through the journey,” the bank said.

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Management view

Rajiv Anand, Deputy Managing Director, Axis Bank, said, “We have been early adopters of many innovative technology frameworks such as UPI, Account Aggregator ecosystem, Video KYC, etc., and are excited to participate in the Public Tech Platform for Frictionless Credit initiative of RBIH, to launch Kisan Credit Cards and MSME loans.”

“This platform will bring immense efficiency in the lending process in terms of reduction of costs, quicker disbursement, and scalability. Meaningful growth in India can be driven by expanding the credit fold, and we are happy to continue playing a role in helping millions of Indians fulfil their financial dreams and aspirations,” he added.

Sameer Shetty, President & Head, Digital Banking and Transformation, Axis Bank, said, “Through the PTPFC, we will be able to access a variety of data required for underwriting directly from authenticated sources in a fully customer-consented and secure manner. This initiative by the RBI and RBIH will shepherd a new era of democratisation of credit and bring down costs of lending to the current credit-deprived segments, while maintaining good credit quality.”

Brokerage views

Most brokerage firms are bullish on the Axis Bank stock. The broking firm Prabhudas Lilladher has given a target price of Rs 1,170 per share with a ‘buy’ rating in a report released on July 27. The firm further stated in the report that, “The quarter was good for the bank; NII/NIM beat and superior quality of business growth.”

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Brokerage house LKP Research assigned a target price of Rs 1,090 per share for the Axis Bank stock in a report released on August 7, signifying a potential upside of 14 percent from the current market price. The brokerage firm further stated that, “Bank reported stable results, however PPOP de-growth and high CDR are concerning.”

Brokerage house Emkay Global has given a ‘buy’ rating with a target price of Rs 1,260 per share for the bank in a recent report stating that, “though the growth of the bank has improved, margin slips again.”

Brokerage firm ICICI Securities has given a target price of Rs 1,160 with a ‘buy’ rating in a report released on July 27, adding that, “the quarter was mixed for the bank, strong RoA was aided by treasury gains but QoQ business growth was soft.”

HDFC Securities has given a ‘buy’ rating to the Axis Bank stock with a target price of Rs 1,150 in a report released on July 26. The report further stated that, “This has been a soft start to integration with rerating catalysts distant.”

Brokerage house Motilal Oswal assigned a ‘buy’ rating to the Axis Bank stock with a target price of Rs 1,150 per share in a report released on July 26. The report further stated that, “Earnings of the bank were in line still business growth remains modest. Asset quality remains stable.”

Stock Performance

The Axis Bank stock has gained 10.31 percent over the last six months, compared to a 7.8 percent rise in the Nifty Bank index.

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