The Bank aims to increase its share in the financial services sector by continuing to build a strong retail franchise. The segment continues to be one of the key drivers of the Bank’s growth strategy, encompassing a wide range of products delivered through multiple channels to customers. The Bank offers a complete suite of products across deposits, loans, investment solutions, payments and cards and is committed to developing long-term relationships with its customers by providing high-quality services.
The Bank pursues an effective customer segmentation strategy, the success of which is reflected in the fact that Savings Bank deposits grew at a Compounded Annual Growth Rate (CAGR) of 26.13% over the last five years. During the year, Savings Bank deposits grew 23.44% to Rs. 63,778 crores from Rs. 51,668 crores last year. On a daily average basis, Savings Bank deposits grew 20.26% to Rs. 52,243 crores. The Bank has also maintained its approach in increasing the proportion of Retail Term Deposits. On the 31st March 2013, retail term deposits grew 24.37% year-on-year to Rs. 59,531 crores, constituting 42.37% of total term deposits, compared to 37.20% last year. Likewise, the Bank continued to focus on increasing its share of retail loans in total advances. The retail loans of the Bank grew 43.62% to Rs. 53,960 crores as on 31st March 2013 from Rs. 37,570 crores last year. Retail loans constituted 27.40% of the Bank’s total advances as on 31st March 2013, compared to 22.13% last year of which secured loans accounted for 87%. The distribution of specific portfolios within the Retail loan segment as on 31st March 2013 was as follows: home loans - 65%, loans against property - 7%, auto loans - 14%, personal loans and credit cards - 9%.
The Bank sources retail loans through 120 Asset Sales Centres operating out of 96 cities with standardised appraisal and oversight mechanisms. Retail loans are also originated from 1,183 branches through which one-third of incremental retail loans are currently sourced. The cards business is an integral part of the Bank’s retail strategy with ever-increasing numbers of transactions moving to the electronic mode. The Bank is one of the largest debit card issuers in the country, with a base of 142.9 lacs, which rose from 124.99 lacs at the end of last year. With more than a million cards in force, the Bank is now the sixth largest credit card issuer in the country. The Bank has also emerged as one of the largest acquirers in the country with an installed base of 2.16 lac point-of-sale terminals. During the year, the Bank also launched mobile POS.
To Indians living and working overseas, the Bank offers a complete suite of banking and investment products under its NRI Services. The Bank has 49 branches authorised to issue Portfolio Investment Scheme (PIS) permissions to NRIs/PIOs who wish to trade in the Indian secondary markets through registered stock brokers on recognised stock exchanges. To support the business, the Bank has launched a 24x7 integrated helpdesk for NRI customers with the facility of toll-free numbers from key geographies. As on 31st March 2013, the Bank’s aggregate NRI deposits (Savings + Term Deposits) stood at Rs. 13,104 crores against Rs. 8,624 crores last year. The Bank also offers products in the area of retail forex and remittances, including travel currency cards, inward and outward wire transfers, travellers cheques and foreign currency notes, remittance facilities through online portals as well as through collaboration with correspondent banks, exchange houses and money transfer operators. The bank continued to have a market leader position in Travel Currency cards with 11 currency options other than INR being offered. The bank is planning to introduce two new currency options New Zealand Dollar (NZD) and Thai Baht (THB). Additionally, the Bank also launched a multi-currency card specifically aimed at corporates and business travellers. The aggregate load value on Travel Currency Cards crossed USD 3 billion during the year.
‘Axis Bank Privée’, a business vertical offers private banking solutions to meet the personalised investment needs of high net worth individuals as well as the corporate advisory needs of families in business. Axis Bank Privée brings solutions offered by various business groups (retail and corporate) within the Bank and various group entities under one integrated platform.
The Bank also distributes third party products such as mutual funds, Bancassurance products (life and general insurance), online trading and gold coins through its branches. The Bank is one of the leading banking distributors of mutual funds in India and distributes mutual fund products of all major asset management companies. These products are sold through the Bank’s branch distribution network based on client requirements. The Bank also distributes life insurance products of Max Life Insurance Company and during the year, it sold more than 1.86 lac policies with a premium mobilisation of Rs. 790.62 crores. During the year, the Bank entered into an arrangement with Tata AIG General Insurance Company Limited to distribute general insurance products. The Bank offers online trading services to its customers in collaboration with Axis Capital Ltd. (a 100% subsidiary of the Bank) under the name Axis Direct, an enhanced and simplified Online Trading platform which is now available to NRI customers. During the year, 148,390 online trading accounts were opened, taking the total number online trading accounts to 297,069 as on 31st March 2013. The Bank also sold gold and silver bars to retail and corporate customers under the brand ‘Mohur’ through its branches.
During the year, the Bank added 325 branches spread across 279 centres. The Bank added 1,321 ATMs during the year to reach a network size of 11,245 as on 31st March 2013 compared to 9,924 ATMs last year. The Bank has deployed 550 Automated Deposit Machines (for cash deposits into customer accounts) and has extended this facility 24X7 in certain branches which have integrated self-service lobbies. Besides the ATM network, internet banking, mobile banking and phone banking have developed as important alternate channels of the Bank.
Business Banking offers transactional banking services, leveraging upon the Bank’s network and technology. Its initiatives focus on procurement of low-cost funds by offering a range of current account products and cash management solutions across all business segments covering corporates, institutions, central and state government ministries and undertakings as well as small and retail business customers. Product offerings of this business segment aim at providing customised transactional banking solutions to fulfill customer’s business requirement. Cross-sell of transactional banking products, product innovation and a customer-centric approach have succeeded in growing current account balances and realisation of transaction banking fees. As on 31st March 2013, balances in current accounts increased by 21.55% and stood at Rs. 48,322 crores compared to Rs. 39,754 crores last year. On a daily average basis, current accounts balances grew by 4.73% to Rs. 28,698 crores compared to Rs. 27,403 crores last year.
In the cash management services (CMS) business, the Bank focuses on offering customised service to its customer to cater to specific corporate requirements and improve the existing product line to offer enhanced features to customers. The Bank is also focusing on host-to-host integration for both collections and payments, such as IT integration between corporates and the Bank for seamless transactions and information flow. The Bank provides comprehensive structured MIS reports on a periodic basis, for better accounting and reporting. CMS continued to constitute an important source of fee income and contributed significantly to generate low cost funds. The Bank is one of the top CMS providers in the country with the number of locations covered under CMS increased to 890 from 801 last year. The number of CMS clients has grown to 15,818 from 11,548 last year.
The Bank has been acting as an agency bank for transacting government business to various central government ministries, departments, state governments and union territories. The Bank accepts income and other direct taxes through 406 authorised branches at 225 locations and central excise and service taxes though 56 authorised branches at 14 locations including e-payments. The Bank also handles the disbursement of civil pension through all its branches and defence pension through 151 authorised branches. In addition, the Bank provides collection and payment services to four central government ministries/departments and 13 state governments and union territories. The Bank is associated with 11 state governments towards undertaking Electronic Benefit Transfer (EBT) projects for disbursement of government benefits (wages under MGNREGS and Social Security Pension (SSP)) through direct credit to beneficiary bank accounts under smart card based IT enabled financial inclusion model. The total government business throughput during the year was Rs. 92,680 crores.
The Bank is a SEBI-registered custodian and offers custodial services to both domestic and offshore customers. As on 31st March 2013, the Bank held assets worth approximately Rs. 12,511 crores under its custody, registering a growth of 6% over last year.
In the backdrop of a subdued macro-economic environment, capital expenditure by corporates remained lacklustre during the year. Loans for working capital and the drawdown on committed sanctions in existing projects under implementation contributed to the growth in corporate credit during the year. The corporate credit portfolio of the Bank comprising advances to large and mid-corporates including infrastructure) grew 7.89% to Rs. 98,239 crores from Rs. 91,053 crores last year. This includes advances at overseas branches amounting to Rs. 29,972 crores (equivalent to USD 5.52 billion) comprising mainly the portfolio of Indian corporates and their subsidiaries as also trade finance. The advances at overseas branches accounted for 15.22% of total advances. The Bank’s infrastructure business includes project and bid advisory services, project lending, debt syndication, project structuring and due diligence, securitisation and structured finance.
The Bank has introduced a relationship model, focusing on cross-selling a wide range of products to corporates. Fee-based business through loan syndication, trade finance and treasury business continued to grow. The Bank’s sectoral approach to credit continued to achieve greater efficiency with increased attention on identifying sector-specific opportunities. Portfolio composition is being continuously monitored by tracking industry, group and company-specific exposure limits. The internal and external rating of the credit facilities of customers is undertaken and monitored on ongoing basis with the entire lending portfolio of the Bank being internally rated.
The mid-corporate group continues to be an important business franchise of the Bank with an asset book of Rs. 20,010 crores as on 31st March 2013, registering a growth of 15.23% over last year. In view of the macro economic scenario, exposure was confined to industries with a positive outlook only after evaluation of relevant credit risk factors with the objective of booking better-rated exposures.
The Bank has an integrated Treasury, which covers both domestic and global markets and funds the balance sheet across geographies. It plays an important role in the sovereign debt markets and participates in primary auctions of RBI. It also actively participates in the secondary government securities and corporate debt market. Over the last few years, the Bank has emerged as one of the leading banks providing foreign exchange and trade finance services. Through its various verticals, the Treasury serves customers across various industries, segments and regions. The foreign exchange and money market group under Treasury is an active participant in the inter-bank/financial institutions space. It also maintains proprietary positions to generate trading income for the Bank. An active Balance Sheet Management group within Treasury takes care of asset-liability mismatches and interest rate sensitivities of the Bank’s portfolio. The interest rates and derivatives group provides derivative solutions to customers for its balance sheet and currency exposures. The Global Financial Institutions Division (GFID) group in Treasury is responsible for fostering business relationships with financial institutions across geographies and undertakes foreign currency fund raising.
The Bank continued to be a dominant player in placement and syndication of Rupee denominated debt. During the year, the Bank arranged debt aggregating to Rs. 145,461 crores and retained its top position in arranging Rupee denominated debt for the fifth consecutive calendar year as per Bloomberg and also as per PRIME Database for the nine months ended December 2012. During the calendar year 2012, the Bank won the Best Domestic Bond House in India by The Asset Triple A Country Awards by Asset Magazine, India Bond House by the IFR Asia, and Deal Maker of the year by Business World Magazine.
The international operations of the Bank have generally catered to Indian corporates who have expanded their business overseas. The overseas network of the Bank currently spans the major financial hubs in Asia. The Bank now has a foreign network of four branches at Singapore, Hong Kong, DIFC-Dubai and Colombo (Sri Lanka), and three representative offices at Shanghai, Dubai and Abu Dhabi, besides strategic alliances with banks and exchange houses in the Gulf Co-operation Council (GCC) countries. While branches at Singapore, Hong Kong, DIFC-Dubai and Colombo enable the Bank to partner with Indian corporates doing business globally and primarily offer corporate banking, trade finance, treasury and risk management solutions, the Bank also offers retail liability products from its branches at Hong Kong and Colombo. The representative offices and strategic alliances with banks and exchange houses in the GCC countries cater to the large Indian diaspora and promote the Bank’s NRI products. With management of liquidity being a major challenge in the present global markets, the Bank consciously restrained its asset growth at the overseas centres to report an asset size of USD 6.84 billion as at 31st March 2013 vis-à-vis USD 6.35 billion as at 31st March 2012. Further, interactions are also in progress with China Banking Regulatory Commission (CBRC) for upgrade of the Shanghai Representative Office into a branch.
Technology is one of the key enablers for business and for delivering customised financial solutions. The Bank continued to focus on introducing innovative banking services through investments in scalable, robust and function-rich technology platforms to enable delivery of efficient and seamless services across multiple channels for customer convenience and cost reduction. The Bank has also focused on improving the governance process in IT. During the year, the Bank has received certification of ISO 27001:2005 by BSI (ANAB accredited) for complying with the standards of Information Security Management System for its data centres located in Navi Mumbai and Bengaluru. The Bank has also successfully completed migration of its data centre to a co-hosted location during the year. The new premises offer a category IV data center that complies with the highest benchmarking standards applicable to data centres promising built-in redundancy of infrastructure. A robust Project Management framework is used to ensure that investments in IT are based on good gate-keeping principles and result in appropriate payback in value terms.
The Bank has made significant progress in implementing the recommendations of the RBI Working Group issued in April 2011 on Information Security, Electronic Banking, Technology Risk Management and Cyber Frauds. The Bank is committed to implementing the recommendations on the various subject areas indicated in the guidelines. The broad measures taken in respect of the various areas included conducting a detailed gap analysis to implement the controls/suggestions contained in the guidelines, examining each recommendation closely and taking decisions either to acquire a solution or implement procedural controls. The Bank has put in place the appropriate organisational framework as recommended in the guidelines. Several information security solutions have either been implemented or finalised for implementation to protect customer data, prevent external attacks as well as strengthening internal controls. Policies and procedures of the Bank have also been reviewed and suitably modified. The progress in each area of the recommendations has been closely monitored by the top management and the status of implementation has been reported to the Board and RBI at regular intervals.
The Bank has identified agricultural lending as an area of potential growth and offers a diverse range of lending solutions to the farming clientele and other stakeholders in the agriculture value chain. Activity and geography specific products and product variants were introduced to effectively reach out to the various value-chain participants and to meet their credit requirements. In order to provide a strategic focus to agricultural lending, the Bank has adopted a cluster-centric approach for agricultural lending in areas where the Bank believes agriculture is intensive and where a potential market exists. The business architecture for agriculture business is decentralised with Agriculture Business Centres (ABCs) at various locations across the country spearheading the business. To increase the focus on unbanked and under banked areas, 3 new ABCs were formed during the year at Guwahati (Assam), Bhubaneswar (Odisha) and Patna (Bihar). The branches and agriculture clusters follow a hub-and-spoke model with branches being the sole touch point for farmers. As of 31st March 2013, the agriculture business is operated through 759 branches attached to 93 agricultural clusters, which are controlled by 20 ABCs. To achieve the objectives of increasing the business reach, consistent growth of portfolio and maintaining quality of assets, business, credit, operations and collections functions in this business are handled independently.
Apart from lending to farmers, the Bank also actively participates in awareness campaigns and forming farmer’s clubs in many of its upcountry branches in co-ordination with National Bank for Agriculture and Rural Development (NABARD). The Bank allies with reputed corporates in agro based industries to provide value to the farmers. The Bank will continue to increase its reach in rural and semi-urban areas by increasing the number of agriculture clusters and ABCs as per requirement and bring more and more branches under agriculture lending.
The Bank also supports the weaker sections of society through its lending to Micro Finance Institutions (MFIs). To improve credit delivery to the target customers through smart use of technology, the Bank in the current year has started Axis Sahyog, a social collateral lending initiative wherein economically active weaker section individuals are provided with micro loans for agriculture and micro enterprises. Biometric enabled IT architecture is used for enrolment and for authorising transactions. Presently, Axis Sahyog has been implemented in two states: Bihar and Madhya Pradesh. The Bank also uses the services of institutional Business Correspondents for sourcing and servicing micro loans in a southern state. The Bank pioneered first ever listing of Multi Originator Securitisation (MOSEC) transaction of microloans in the country. This initiative will go a long way in developing an alternate source of funding for the microfinance sector.
As on 31st March 2013, the Bank’s outstanding loans in the agricultural sector was Rs. 14,845 crores, constituting 7.54% of the Bank’s total advances
The Bank regards financial inclusion not merely as a corporate social responsibility initiative but as an integral component of its rural strategy. The financial inclusion initiatives of the Bank are aimed at enabling customers in rural markets to use formal banking channels for their banking needs such as savings, payments, credit and insurance. Apart from savings, payments are the major requirement of such customers due to migration of workforce. The Bank offers no-frills accounts, tailor-made fixed deposits and recurring deposit products to meet the savings requirements of customers. As on 31st March 2013, the Bank had opened 61.61 lac no-frills accounts covering 42,338 villages.
The Bank has been in the forefront of several innovations in this space. It has tied-up with leading telecom companies to provide savings and remittance facilities using the mobile phone and their distribution outlets in key domestic payment corridors. The Bank is also a leading player in the remittance market, enabling migrant workers in urban areas remit money to their families in the hinterland. The Bank endeavours to meet the entire set of financial needs of its customers, including micro-lending, ‘Chhota-deposits’ and micro-insurance (under life and general insurance categories).
The Bank also actively participates in electronic/direct benefit transfer for disbursal of benefits under various government schemes using smart cards and biometric authentication technology. The Bank has made significant investments in technology, and is integrated with the Aadhar platform through NPCI to enable transfer of Aadhar based social welfare benefits. The Bank has launched several programmes to deliver micro-loans to rural customers through its business correspondents in Tamil Nadu, Bihar and Madhya Pradesh. It has also tied up with leading corporates to deliver credit to their end consumers through their rural supply chain partners.
The Human Resources (HR) function is instrumental in creating and developing human capital in alignment with the Bank’s vision. Talent Management with particular focus on grooming future leaders, learning and development and employee engagement have been the key focus areas in the Bank’s HR objectives.
The Bank has built a learning infrastructure to ensure availability of skilled and empowered workforce. The Learning Maps aligned to the overall development plan of employees are designed to facilitate learning process across all levels through a blended learning approach of classroom programmes, external programmes, certification programmes as well as e-learning modules. The Bank also creates alternate talent pipelines by entering into arrangements with Training and Education Institutes and continues to maintain a strong employer brand in the financial services sector especially on the campuses of the premier business schools of the country. Apart from having a strong presence in the talent market, the Bank also believes in maintaining a strong image internally by keeping its workforce engaged at all levels.
To inculcate and live its motto of ‘One Bank, One Axis’ and foster a spirit of connectedness, the Bank hosts several employee engagement programmes and channels to connect its thinly-spread employee population across a widely dispersed geographical network. Through these platforms, employees can share their unique experiences, facilitate best practice sharing, cast their opinion and feedback about the Bank’s products and services. The Bank also offers avenues for several employee health and wellness initiatives throughout our network.
The Bank has been conducting its annual Employee Engagement Study to capture, analyse and draw action plans to enhance the engagement quotient. A third-party framework, benchmarked as one of the best, is used for administering and analyzing the results of the study, with focus on measuring and improving employee engagement quotient. Taking concrete steps based on the study findings helps in building a stronger and more engaged workforce.
The Bank seeks regular feedback from employees on the policies and practices to ensure that it is in consonance with employee empowerment. Incidentally, the focus areas for the Bank’s performance management system are Ownership, Continuous Process and Humane Touch, which are driven by strengthening the culture of performance feedback (both formal and informal). In addition to performance, the personal development plan of an employee includes a feedback on behavioural competencies for growth.
Axis Leadership Practices (ALPs) are defined for employees at different levels of the hierarchy to promote desired behavior and to facilitate an objective assessment. The ALPs form a framework for all the people processes in the Bank. These are an integral part of processes like Talent Acquisition, Performance Management System, Promotion, Talent Appreciation, Leadership Development and Feedback. The Bank has partnered with the best in class leadership trainers of the country to provide key position holders and unit heads the fundamentals of managing self and team leadership though a series of ‘Inspired Leadership’ workshops. The Bank has also launched an inhouse multi-rater feedback tool ‘ALP Compass’, based on the Axis Leadership Practices.
The strength of the workforce was 37,901 at the end of the year as compared to 31,738 last year. A young workforce with an average age of 29 years and the Bank’s policy of being an equal opportunity employer continues to significantly contribute towards emergence of the Axis Bank brand. The Bank inspires everyone to excel and contribute to, irrespective of gender, race or age, and this echoes in all HR initiatives undertaken. The Bank is also a socially responsible employer. Apart from housing its own NGO ‘Axis Bank Foundation’, the Bank has partnered with Teach for India for promoting the noble objective of providing education to underprivileged children.
The Bank continues to strive towards realisation of its vision of being the preferred financial service provider excelling in customer delivery through insight, empowered employees and smart use of technology.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As an integral part of society, the Bank is aware of its corporate social responsibilities and has been engaged in community and social investments. For this purpose, the Bank has set up a Trust – the Axis Bank Foundation (ABF) to channel its philanthropic initiatives. The Foundation has committed itself to participate in various socially relevant endeavours with a special focus on providing sustainable livelihoods, poverty alleviation, education of the underprivileged, healthcare etc. The Bank has decided to contribute up to one percent of its net profit annually to the Foundation under its CSR initiatives. The Foundation is constantly engaged in identifying the right target group and ensuring that support reaches the ultimate beneficiary. Presently, the Foundation is running 40 programs across 163 districts in 19 states, targeting 7,27,059 beneficiaries.
The Foundation has been providing support to various initiatives in education, targeting underprivileged children. Presently, 23 programs are running in the field of education covering 33 districts in 13 states promoting supplementary education, education for the mentally/physically challenged, hearing impaired, visually challenged etc. During the year, the Foundation has disbursed Rs 6.23 crores for various education programs. The Foundation also works for providing highway trauma care and rural medical relief. The Foundation has been working with Lifeline Foundation since 2007 for supporting the highway rescue projects in the states of Maharashtra, Kerala, Gujarat and Rajasthan. It has provided aid to around 7,500 critical accident victims and more than 15,000 minor accident victims. The Foundation aims to provide one million livelihoods to the underprivileged in some of the most backward regions of the country by 2017, 50% of the beneficiaries being women. The Foundation has so far partnered with 17 NGOs to provide sustainable livelihoods and has launched projects in partnership with these NGOs in the states of West Bengal, Odisha, Tamil Nadu, Maharashtra, Jharkhand, Chhattisgarh, Bihar, Uttar Pradesh and Madhya Pradesh. These programs aim at alleviating poverty and help in providing sustainable livelihood options. Presently, 17 programs are running in the field of livelihood covering 136 districts in 17 states. During the year, an amount of Rs 31.09 crores was disbursed towards various livelihood programs.
The Foundation is also actively involved in implementing several initiatives in Green Banking. In line with the Bank’s initiative in Green Banking with the theme of ‘Reduce, Reuse and Recycle’, the Foundation has initiated the process of collecting all the dry waste, generated in the Corporate Office and seventeen offices of the Bank in Mumbai and recycle it into notebooks, notepads and envelopes. This initiative was launched in August 2011, has helped recycle around 87,206 kilograms since inception. The Foundation also has an Officer Engagement Program, which encourages officers of the Bank to get involved in various volunteering activities. The Bank launched an employee payroll program titled ‘Axis Cares’. As on 31st March 2013, 7,524 officers of the Bank have enrolled for Axis Cares with a monthly collection of Rs. 14.64 lacs. The funds collected under this initiative are utilised for the programs of the Foundation and the details of utilisation are shared with the officers every month. Under the aegis of ‘Basket of Hope’, the Foundation organises collection drives for clothes, books and toys for distribution to the needy. The Foundation has also launched a new initiative titled ‘Gift of Life’. During the year, 27 blood donation drives have been organised across the country, through which 1,934 units of blood has been collected. Exhibitions of various NGOs are held at the Corporate Office and other offices of the Bank, to provide a platform to these NGOs for exhibiting their products and popularise their work. Conducting the exhibitions has also promoted volunteering among our officers with NGO partners. During the financial year, 56 such exhibitions have been organised which has helped these NGOs to generate sales over Rs. 14.40 lacs.