Axis Bank touts quality push, but market flags a host of concerns
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Axis Bank tightened its asset classification and income recognition norms, signalling a more conservative credit approach that appears to have dented the lender's June-quarter profitability. An unexpected bottom-line shrinkage caused the stock to slump more than 5% Friday, forcing a retreat of the Nifty on which Axis Bank has the third-biggest weighting among private lenders. "Asset classification happens on a days-past-due (DPD) counter basis, but classification can also occur based on qualitative parameters," said Puneet Sharma, CFO of Axis Bank, during the post-earnings analyst call. "These are non-DPD-led parameters that have been tightened, resulting in higher slippages for the quarter." Sharma explained that under the previous norm, if a borrower with a ₹100 personal loan was five days past due and agreed to a settlement plan, such as three instalments of ₹30 with a one-month moratorium, the account would be ...