In a recent exclusive interview, Rajiv Anand, Deputy Managing Director at Axis Bank, shared his perspectives on India's economic landscape, credit demand, and monetary policy expectations. His insights offer a valuable understanding of the challenges and opportunities shaping the Indian banking sector today.

Corporate Credit Demand and Economic Slowdown

Rajiv Anand highlighted the palpable slowdown in growth following Q2 corporate earnings. Despite a challenging economic environment, Axis Bank continues to focus on robust growth in SME and mid-corporate lending. The bank has observed limited credit demand from corporate India, reflecting cautious sentiment in investments amidst global and domestic uncertainties.

Monetary Policy and Inflation

On the monetary front, Anand noted that a repo rate cut seems unlikely given the current inflation rate of 6.2%. He emphasized that inflation remains a key concern for policymakers, making immediate rate cuts improbable. However, he expressed optimism about the potential for a CRR (Cash Reserve Ratio) cut in upcoming policy decisions, which could provide liquidity support to banks.

Net Interest Margins and Banking Sector Trends

Anand also pointed out that the net interest margin (NIM) is expected to stay in a tight range. This stability in NIM reflects the current dynamics of the banking sector, where competition for deposits and cautious lending practices are prominent.

SME and Mid-Corporate Lending

Axis Bank's SME and mid-corporate portfolios have continued to show strong growth, a positive sign amidst a broader slowdown in corporate credit. Anand underlined the importance of this segment in driving sustainable economic growth and supporting local businesses.

Conclusion

Rajiv Anand’s insights provide a clearer picture of the challenges and opportunities in the current market. While corporate credit demand remains subdued, the growth in SME and mid-corporate lending highlights resilience in critical sectors of the economy. The banking sector continues to focus on navigating inflationary pressures and capitalizing on policy support to drive future growth.

With such perspectives, investors and stakeholders can better understand the trajectory of India’s banking and economic landscape, enabling them to make informed financial decisions.