“In the past, we focused more on infrastructure and long-term loans in the corporate sector. Now we are more focused on working capital or short-term loans to reduce risk,” said Rajiv Anand, Deputy General Manager of Axis Bank, in an interview.

“I believe lending to MSMEs (small and medium enterprises) in the next decade will be the same as retail in the previous decade.”

The MSME segment currently accounts for around 20% of Axis’ loan portfolio, said Anand.

The bank’s corporate loan book grew 13% in the September quarter, while SMEs grew 28% and medium enterprises 49%.

Creditors see demand for investment growth, in addition to working capital, as an indicator of investment recovery.

“The economic environment is very supportive, the credit environment is tame and the company’s balance sheet has been deleveraged, so we don’t see any short-term challenges,” said Anand.

“We’re pretty positive about the segments we’re focusing on.”

Over the past few months, creditors, including Axis Bank, have raised the issue of poor corporate credit valuations as a group of banks pursue opportunities to spur credit growth.

But Anand says the problem is easing now that more businesses are looking to borrow from banks.

And while credit growth has returned, deposit growth has remained subdued. Creditors see loan growth of around 17%, while deposit growth was 8.25% as of Nov. 4, according to the central bank’s latest data.

To increase its savings, Axis Bank has renewed its focus on the company’s payroll account and is working to increase the productivity of each branch, said Anand.

THE AGREEMENT WITH CITI IS ON THE WAY

Axis Bank said in March it would buy Citigroup Inc’s domestic consumer banking unit. for $1.6 billion to increase its credit card and retail business.

“The target is for the transaction to be completed in the first quarter of next calendar year. We are on track to meet that deadline,” said Anand.

Some analysts suggest that Citi’s credit card business has contracted in recent months, which could lead to lower prices, but Anand dismissed the suggestion.

“The numbers are generally in line with expectations. So the narrative that the numbers are falling is not true.”