<\/p>\n
\u201cWe have made excess provisions of Rs 7000 crore to ensure that we go through the COVID-19 crisis without any problems,\u201d said Amitabh, adding that the lender was well capitalised prior to the raise. The CEO said the fund raise would however improve the ability of the lender to deal with contingencies and market disruptions which could arise due to the pandemic. \u201cWhen the economy comes back to normal, we will be in a very good position to provide credit to all kinds of borrowers,\u201d added Chaudhry.<\/p>\n
PE infusion<\/b><\/p>\n
Amitabh Chaudhry further did not rule out an infusion after the QIP, a day after The Economic Times (ET) reported of PE firm Carlyle\u2019s plans to infuse Rs 5000 crore into the lender. \u201cWe have an approval from both our board and shareholders to raise Rs 15000 crore, of which we have raised Rs 10000 crore and have room for another Rs 5000 crore,\u201d remarked Chaudhry, adding \u201cWe are approached by various investors and we will keep our eyes and ears open if the right structure and right price comes along.\u201d The CEO however added that a possible infusion would be spread across the year, noting \u201cWe have approval for a year [to raise funds] and will be open for any transaction that may come along.\u201d<\/p>\n
\u2018Activity has started coming up\u2019<\/b><\/p>\n
Chaudhry also noted the increasing activity levels, specifically over disbursements since the pandemic first emerged. \u201cBecause of the COVID crisis it was really difficult to predict, understand and appreciate the need of individuals and corporates for additional money. No one was using the money to invest, it was mostly for refinance, or due to a liquidity crunch, or because your shop was shut and you needed to pay salaries and debtors,\u201d echoed Chaudhry whilst remarking that working capital cycles were emerging and volume demand was also going up. \u201cCompanies are looking for additional money to refinance, as interest rates have gone down or they are expanding the capacity, or in some cases they are readying up plans and finishing up capacity expansion plans which were undergoing,\u201d adding the head of Axis Bank whilst cautioning against a faster recovery of credit growth.<\/p>\n
Branches can become sales outlets rather than service centres<\/b><\/p>\n
The COVID-19 pandemic gave an opportunity to look at the branch of the future, said Chaudhry whilst adding a physical presence would yet be important for its tangibility aspect. He however foresaw a change in the size and format of the physical presence could be changed from service centres to sales outlets, noting \u201cafter reaching a certain size and scale of physical presence the rates of having branches would slow down, because the customers will become so used to using digital solutions,\u201d<\/p>\n
Retail Cycle<\/a> Problems<\/b><\/p>\n \u201c<\/b>This time we will see bigger problems on the retail side rather than the wholesale side,\u201d cautioned the CEO of Axis Bank, adding \u201cThe economy has got a severe shock, across the corporate and retail sector, there are a lot of people who have lost their jobs and businesses, or are seeing salary cuts, or are going through anxiety to thrive in their existing jobs,\u201d Chaudhry also added that the crisis would bring out a segmentation between financial institutions, also noting \u201cYou will definitely see a retail cycle in the coming quarters to come, and this will also continue to impact reserves of companies for a long period of time due to which they might not be able to survive.\u201d<\/p>\n Stronger Banks and Recovery Outlook<\/b><\/p>\n Amitabh Chaudhry also foresaw a disctinction between well capitalised banks who would manage the crisis well, largely due to to capital raising abilities. \u201cWhen the economy goes up, they have the requisite capital to grow easily and they can also use the opportunity to continue to invest in the future,\u201d said the banker on stronger bankers, whilst remarking \u201cWhoever has capital and asset quality issues will not be able to execute as well, because their focus is somewhere else.\u201d<\/p>\n On the growth timeline, Chaudhry said \u201cThis year is going to be a tough year, and in the second and third quarter there will be a lot of data coming out on restructuring,\u201d adding that the crisis would have an end date due to the development of vaccines. \u201cOnce the vaccines come the economy will start reviving at a much faster pace and the comfort of the people will increase,\u201d said Amitabh Chaudhry, adding \u201cif we assume there is an end date, next year things should start looking up in a meaningful manner and at that time the banking<\/a> industry will benefit from the revival of the economy.\u201d<\/p>\n<\/div>\n