Axis Finance To Get Upper-Layer NBFC Tag

"Axis Finance will become an upper layer in the NBFC space very soon given the size of its AUM and that will also mean that we get onto this path of having to list it at some stage in the future," said Amitabh Chaudhry, MD and CEO, Axis Bank.

According to RBI norms, an NBFC classified as an upper layer NBFC must mandatorily list its shares on a stock exchange within three years of being identified as such by the RBI.

Meanwhile, the bank is also planning to sell a part of its stake in Axis Finance to provide growth capital for the NBFC, as the RBI has mandated that the bank cannot infuse additional equity into its subsidiary.

However, uncertainty over the RBI's Forms of Business circular -- which had proposed barring any overlap between the businesses of banks and their group entities -- had created a significant overhang among investors looking to invest in Axis Finance.

However, this month, the RBI proposed to remove this overlap, removing a major overhang over Axis Finance's proposed stake sale.

"On Axis Finance, we are going through a process. One of the things that the RBI governor has talked about is that they will give banks some leeway when it comes to the forms of business circular. We are awaiting the details of what RBI has in mind," Chaudhry said.

"But at the same time, Axis Finance is growing quite well, and it has its capital requirements and we do need to ensure as the owner of Axis Finance that they get capital at the right time. So, we will continue to evaluate our options and do the right things for Axis Finance. Hopefully, the form of business circular is not very far away and that will give us clear direction in terms of the flexibility we have," he said, adding that "there are quite a few factors at play and obviously, we are taking all of them into account as we evaluate raising money in Axis Finance."

-- Subrata Panda, Business Standard