Axis Bank Ltd. is reportedly exploring options for its non-banking financial company (NBFC), Axis Finance Ltd., including the possibility of selling a majority stake. Sources familiar with the matter have indicated that the bank is conducting a strategic review with the help of an adviser.
Potential Valuation and Ongoing Discussions
According to reports, Axis Bank is looking at a valuation of approximately $900 million to $1 billion for Axis Finance in a potential deal. However, discussions are still in progress, and there is a chance that the bank may ultimately decide against the sale. As of now, Axis Bank has not issued any official statement regarding the matter.
What is a Shadow Bank?
Shadow banks, like Axis Finance, cater to customers who may not qualify for loans from traditional banks due to low income or a lack of credit history. These lenders often charge higher interest rates, making them more susceptible to defaults, which can create risks for the broader financial system.
Axis Bank’s Support for Axis Finance
Axis Finance has received significant financial backing from Axis Bank. According to a January report by India Ratings & Research, Axis Bank infused ₹3 billion into Axis Finance in FY 2024 to support its growth. Additionally, the bank provides ₹20.5 billion in backup funding and oversees its operations.
About Axis Finance
Axis Finance is a wholly owned subsidiary of Axis Bank, offering various financial services such as corporate loans, collateral-based lending, and real estate financing. The company plays a key role in the bank’s financial ecosystem, and any stake sale would be a major development in the banking sector.
