In order to make priority sector lending a profitable business, Axis Bank, India’s third largest private sector lender, plans to grow its PSL book systematically.
Munish Sharda, head of the bank’s Bharti banking initiative, said axis Bank To achieve this goal, alliances are being considered. The comments were made at an event organized to announce an alliance with Paynearby, a company that provides ‘Delivery as a Service’. It works with corporates to help them build an edge in semi-urban and rural markets.
Under the Paynearby tie-up, Axis Bank aims to provide better lending opportunities across a range of products. These products are targeted at both individual and small enterprises that qualify for the PSL tag.
This tie-up will give Axis access to over 50 lakh micro retailers. These retailers are being asked to distribute lending and deposit products on behalf of the bank.
As per the terms of the tie-up, Axis Bank will pay for every activity performed through the partner’s network.
“We want to grow the PSL book in an organic way. We want to meet the targets on our own. Otherwise, any shortfall will have to be filled through PSL certificate or other means,” said Sharda.
“Partnerships are like business correspondents. The bank will be in a position to get finer details of a customer, which can be used by the analytics engine to lend or determine interest rates as per the risk profile.” Anand Kumar Bajaj, MD & CEO, Paynearby said that these retailers will act as touchpoints for the bank.
Axis Bank has placed around 2,100 of its 4,800 branches under the Bharat Bank initiative. He said microlending and some other businesses related to the rural economy – such as the agricultural supply chain – also fall under it, said Sharad.
Banks have to give up to 40 percent of their total credit in a year to certain marginalized sections of the society. Such lending activity is classified as PSL.