Back‘Axis Bank to expand financing in EV sector’
While the rate of interest is similar, they have a pricing benefit because a lot of states allow some incentives for EVs, says Sumit Bali, group executive and head of retail lending and payments at Axis Bank
PremiumMUMBAI : Keen to make the most of the current push for adoption of electric vehicles (EVs), Axis Bank is looking to finance dealers as well as retail buyers of such vehicles. Sumit Bali, group executive and head of retail lending and payments at Axis Bank said while the private lender has recently tied with Tata Motors for financing EVs, there are more in the offing and the bank sees significant potential in this space. Edited excerpts:
How has the demand during this year’s festive season been?
Demand has been pretty strong and for us, the credit card business is a good barometer of how consumer confidence is. Typically, we used to see March as the highest-ever month for card spending, overtaken only during the festive season. This year, June was better than March and subsequently also, trends have been good across categories of discretionary and non-discretionary spending. These include travel, hotel, restaurants and multiplexes. On a month-on-month basis, spending is at a record high, so that gives you a sense that customer confidence is good. That, therefore, is also reflected in the other products like personal loans. Even the demand for business loans or for loans to the self-employed segment has been pretty decent. We have not seen any shift because of interest rate hikes. Part of it is pent-up demand too. You spend money on discretionary items when you are fairly confident of the future ahead. People are willing to spend and bet on future incomes going up.
What is your sense of the EV financing space right now and how does Axis want to approach it?
We are looking at financing customers as well as dealers. The idea of having such an exclusive partnership (with Tata Motors) was that this market will grow multifold rather than growing at 15-20% every year. Our sense is that as more players come to this field led by domestic manufacturers like Tata or Mahindra, the space will keep growing. It is also attracting newer players from the international markets. The loan rates are similar to conventional vehicles. While the rate of interest is similar, they have a pricing benefit because a lot of states allow some incentives for EVs. We are keen to fund the dealers because we think that will be an important enabler to grow this industry. Dealers would require working capital loans. Right now, everything is in short supply but hopefully, once the chip situation is sorted out and inventory levels come back to 30-45-day levels, we will see working capital demand for EVs. We are in talks with other manufacturers as well. The entire EV space will see a lot of action. We think it’s an important segment for the future and want to be invested upfront.
How are the co-branded credit cards performing?
In credit cards, all the partnerships we had are scaling up pretty well and are good engines for growth of organic card issuances. The Flipkart card is growing at a good pace and we have some partnerships which we have just started and will start showing results. Currently, a third of our issuances are co-branded cards and spends on those are slightly better than regular credit cards.
Are you seeing any change in home loan demand post rate hikes?
Demand for regular home loans is pretty strong. During covid, the prices had collapsed because of the lack of demand. Since then, we have seen a slight increase in prices by builders which is a sign of confidence that at that price, inventory is moving. We have not seen any impact on demand in the regular home loan segment and that is what is driving growth. In the last three months, we have been pleasantly surprised by the kind of spending we are seeing. Other retail loan segments have also been good.
Is there a greater focus on the rural areas at present?
In the rural segment as a whole, the bank is pretty bullish and that is why there is a senior level resource that looks at it. They are building up partnerships, distribution and enhancing the width and depth of it there. We are going to distribute assets as well as liability products and that continues to be a focus area of the bank and it is a strategy in place.
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