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Informist, Saturday, Jul. 18, 2026

 

--Axis Bank: One-time impact of ECL transition will be marginal

--CONTEXT: Comments by Axis Bank's management in post-earnings analyst call

 

By Pratiksha and Nandini Sinha

 

NEW DELHI/MUMBAI – Axis Bank's senior management expects the one-time impact on net worth from the transition towards the Reserve Bank of India's new expected credit loss framework to be marginal. "On ECL, our assessment as of Mar. 31, 2026, balance sheet is that impact on net worth will be marginal," it said during the bank's post-earnings conference call with analysts on Saturday. "And the marginal impact is purely an outcome of the fact that ECL is an exposure standard, whereas IRAC (Income Recognition and Asset Classification) is an outstanding standard."

 

The RBI's new framework requires banks to provide for expected future credit losses rather than waiting for loans to turn non-performing. The expected credit loss framework will come into effect from Apr. 1, 2027.

 

"On a go-forward rolling impact, effectively, our assessment is that the industry as a whole, including us, should see higher provisions to assets in post or in the first year of transition, purely given the way Stage 1 and Stage 2 provisioning will run against the 40 basis points of standard asset provisioning that runs today," the top management said. 

 

The private sector bank did not disclose its target for mobilising foreign currency non-resident deposits under the RBI's swap facility, which is open till Sept. 30. However, the management said it is seeing good interest from non-resident Indians for its FCNR deposit scheme, and it believes that it will clock above its organic market share.

 

"FCNR(B) deposit is attracting strong interest from NRI customers, and we see it as a meaningful opportunity to augment our deposit base through our NRI franchise and our proactive outreach to banks across overseas markets," it said. On Jun. 8, the Reserve Bank of India unveiled a facility under which it will bear the full hedging costs for banks raising fresh three- to five-year FCNR(B) deposits until Sept. 30. Following this, Axis Bank raised its interest rates on FCNR dollar-denominated bank deposits for three to five-year tenures by up to 305 basis points to 6.00%. 

 

The private sector lender's profit after tax for the June quarter rose 22.5% on year to INR 71.14 billion. The bottom line was marginally higher than INR 70.71 billion a quarter ago. On Friday, shares of the bank closed at INR 1,328.50 on the National Stock Exchange, up 1.6% from Thursday's close.  End

 

Edited by Avishek Dutta

 

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