Axis Bank aims to organically grow its Priority Sector Lending (PSL) book and make it a profitable business, a senior official said on Wednesday.
Speaking at an event to announce a partnership with Paynearby, the third largest private sector lender’s head of ‘Bharat Banking’ initiative Munish Sharda told reporters that the bank wants to become profitable on the PSL front and tie-ups will help in the same cause.
“We want to grow PSL book in an organic manner. We want to meet the targets on our own. Otherwise, any shortfall has to be met through PSL certificate or other means,” Sharda told reporters when asked to elaborate on the profitability comment.
He, however, declined to share the current performance of the bank on the PSL front.
Banks are mandated to lend up to 40 per cent of their overall lending in a year to certain marginalised sections of the society, which is classified as PSL, failing which the shortfall goes into lower-yielding instruments. They also have the ability to acquire PSL portfolios from other lenders to make up for the shortfall.
Sharda said with the tie up with Paynearby, the bank will be able to source better lending opportunities on a slew of products targeted both at the individual and small enterprises which carry the PSL tag.
Under the tie up with Paynearby, which pitches itself as a ‘distribution as a service’ company helping corporates wanting to make headways into semi-urban and rural markets, the lender will get access to over 50 lakh micro-retailers who can distribute the bank’s lending and deposit products.
Paynearby’s founder, managing director and chief executive Anand Kumar Bajaj said that while the number of retailers in its network, who will act as Axis Bank touchpoints, is not clear, over 90 per cent of the 50 lakh retailers listed with it are in the semi-urban and rural areas.
Sharda said the partnership is like that of business correspondents. The bank will be in a position to get finer details of a customer, which can be used by analytics engines while choosing to lend or set the rate of interest as per the risk profile.
He said the bank will pay for every piece of activity done through the partner’s network, and added that it also has a partnership with the state-run Common Service Centres (CSCs) with the similar aim of getting deeper into rural India.
Sharda said the bank has classified about 2,100 of its 4,800 branches as the ones falling under the ‘Bharat Bank’ initiative, and added that microlending and other businesses which touch the rural economy like farm supply chains also fall under it.
He said Bharat Bank is one among the top three areas of priority for the lender and it has ambitious targets from the business, but declined to spell out the exact details of what is being chased.