Axis Bank latest to do a rethink on infra exposure

Written by Reuters | Updated: Nov 29 2011, 07:24am hrs
Axis Bank is closely monitoring its exposure to

infrastructure projects, a senior official said, joining other banks who have turned cautious amid a slowdown in the sector.

The country has been beset by policy gridlock over the past year as a spree of corruption scandals has put the government on the back foot, slowing reforms. Big-ticket projects have been delayed awaiting environmental clearances or access to coal.

The bank has been selective in its approach to finance infrastructure projects, said V Srinivasan, executive director, corporate banking.

Our exposure to infrastructure is well within prudential levels set up by the bank and exposures are being closely monitored, he said.

Rising interest rates, high inflation and worsening global conditions are also dragging down near-term business sentiment in India.

Last week, the chief executive of the countrys second biggest lender, ICICI Bank, had said that the bank was being selective in lending to real estate and power projects. L&T, the countrys biggest engineering conglomerate, is targeting overseas revenue growth as part of a strategy to beat a slowdown in the economy.

"Over the last few months, there has been a slowdown in new project financing requests on account of policy uncertainty and volatility in offshore and local markets," Srinivasan said.

Axis Banks shares have dropped more than 28% this year. The banking index has fallen 27% in 2011.