Axis Bank, India’s third biggest private sector lender, has a plan to grow its Priority Sector Lending (PSL) book organically and make it a profitable business.
Munish Sharda, head of the bank’s Bharat Banking initiative, said Axis Bank is looking at tie-ups to achieve this target. He made these comments at an event held to announce a partnership with Paynearby.
Paynearby is a ‘distribution as a service’ company. It works with corporates to help them make headways into semi-urban and rural markets.
Under the Paynearby tie-up, Axis Bank aims to source better lending opportunities on a range of products. These products are aimed at both the individual and small enterprises that qualify for the PSL tag.
This tie-up will give Axis access to more than 50 lakh micro-retailers. The bank wants these retailers to distribute lending and deposit products.
As per the terms of the tie-up, Axis Bank will pay for every activity done through the partner’s network.
Sharda said, “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.”
These retailers will function as touchpoints for the bank, Paynearby MD & CEO Anand Kumar Bajaj 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 added.
Axis Bank has put about 2,100 of its 4,800 branches under the Bharat Bank initiative, Sharda said. Microlending and some other businesses linked to rural economy — such as farm supply chains — also come under it, he added.
Banks have to make up to 40 per cent of their overall lending in a year to certain marginalised sections of the society. Such lending activity is classified as PSL.
Source: Economic Times