Axis Bank Gets Hold Of Citi India’s Retail Assets For $1.6 Billion
Axis Bank will shell out to Citi cash consideration of approximately $1.6 billion for the acquisition of the consumer business, subject matter to customary closing adjustments. The transaction comprises the sale of the consumer banking businesses of Citibank India, including credit cards, retail banking, and wealth management and consumer loans.
It also takes account of the sale of the consumer business in Citi’s non-banking financial company, Citicorp Finance (India) Limited, comprising the asset-backed financing business, which has commercial vehicle and construction equipment loans, as well as the personal loans portfolio.
The deal excludes Citi’s institutional client businesses in India.
3,600 Citi employees supporting the consumer businesses in India will transfer to Axis upon completion of the proposed transaction. The transaction is expected to close in the first half of calendar year 2023 subject to requisite regulatory approvals.
Axis Bank is the fourth-largest issuer of credit cards with a total base of 8.6 million cards. Its retail book is nearly Rs 4 lakh crore. Citi’s retail book is nearly Rs 68,000 crore of which retail loans account for Rs 28,000 crore.
Axis Bank has supported small businesses to flourish and contribute in the economy with its striking policies. The MSEs are broadly classified as manufacturing enterprises and service enterprises. The manufacturing enterprises are engaged in the manufacturing or production, processing or preservation of goods. Service enterprises are engaged in providing or rendering of services. Axis Bank offers lot of financial solutions to the MSE sector. If any MSE is going through losses in business, Axis Bank provides a framework for its rehab. The eligibility criteria and policy on rehab for MSEs have to be followed to help the revival of the MSE.
System driven management information system that is also known as MIS is published at a regular basis to monitor the growth of MSME advances. Region-wise growth is reviewed and evaluated with the concerned officials. Region specified strategies and activities are planned accordingly for growing MSME advances in line with the organizational goals. Loans are appraised and sanctioned to borrowers who fall eligible for subsidy as per the Credit Linked Capital Subsidy Scheme and various other schemes that are applicable for MSME borrowers.
The objectives of the Rehabilitation policy are:
- To identify the sickness at initial stage
- Initiating remedial measures
- Formulation and implementation of rehabilitation package for potentially viable sick MSE Units.
Axis Bank is committed to extend the best possible services to its customers. Grievance Redressal policy of the bank is mentioned on its website. The MSME customers can utilize different channels like Branches/ Loan centers/ SME centers/ Phone Banking to reach to the bank and submit the grievance. Bank also has an online grievance recording system whereby all borrowers including MSME borrowers availing facilities can lodge their complaint on the bank’s website. Contact details of the concerned officials are given and any complaint received is dealt with at the earliest.
Axis bank also provides training to credit analysts on a regular basis to upgrade their appraisal skills. The Sales/ Relationship managers are also imparted soft skills. Staff handling MSME clients is also sensitized on the various schemes/products offered to MSME borrowers. Bank shall also endeavor to set up a program to impart knowledge to MSME units on various topics of relevance such as marketing, accounting, business planning, etc.
Lending to the MSME segment is primarily done through the SME Department and the Retail Lending .Department of the Bank. Both SME and RL department have officials performing various roles such as Sales, Relationship Management and Credit appraisal. As on date, the Bank does MSME lending through loan centers, bank branches, corporate tie-ups & alternate channel arrangements spread out throughout the country.
Axis bank provides a number of Fund Based and Non-Fund Based limits that cater to both the Working Capital as well as the Term Loan requirement of MSME borrowers.
Term Loans/ Stand-by Term Loans for capacity expansion, general business development, etc are also sanctioned to borrowers having such requirements. The assessment for Term Loans is on the basis of the overall cost of the project which includes a contingency component, which takes care of unforeseen expenses due to reasons such as cost overrun and escalation.
The Bank also provides retail loans such as loan against property, business loans, auto loans, commercial vehicle, construction equipment finance etc to the MSME borrowers.
Axis Bank does not obtain collateral security for loans up to Rs. 10 Lakhs.
The bank also has a simplified template product to sanction working capital & Term Loan facilities guaranteed by CGTMSME up to Rs. 1.00 Cr. to MSE borrowers as prescribed under the scheme.
For other loans, bank accepts a number of securities as collateral, such as Residential/ Commercial/ Industrial land and building, open land and liquid securities such as fixed deposits, surrender value of LIC policy, NSC, Mutual Funds etc.
The application form for credit facilities can be downloaded from the Bank’s website and is also available free of cost with the bank’s SME centers, loan centers and bank branches. The bank provides an acknowledgement for receipt of all loan applications which specifies the time frame within which the application will be processed. Applicant can make an online application on the website.
The Bank requires a processing timeline from the date of completed loan application. This is subject to submission of all documents required by the Bank. These timelines are mentioned on the application form as well as displayed on the Bank website. Basis the submission of requisite documents, an application ID is created for each applicant. The applicant can check the status of the application on the website/SME centres/ Loan centres/ Branches basis this application ID.
The Bank has put in place a Credit Processing Tracking System .The reports generated through this CPTS enables the department to track the applications and ensure their disposal.
With a view to enable quick credit at the local level, officials located at various locations are vested with sanctioning power up to limits that are defined in the Corporate Credit Policy/ Delegation of Financial powers. This ensures that credit decisions up to the defined limits are taken at the local level enabling faster credit delivery to the MSME borrower.
Appraisal and credit rating norms:
The appraisal process involves obtaining KYC of the applicant, evaluating the profile of the prospect, business viability, past credit history, future potential, cash flows, unit visit, end use etc. The appraisal format captures the key information that is essential for taking a credit decision.
The Bank uses scorecard based models for enabling quick credit decisions. For larger exposure which is above Rs. 5 crores, bank uses a detailed credit rating model to determine the credit worthiness of the borrower.
