Introduction

AXIS BANK
Axis Bank India, the first bank to begin operations as new private banks in 1994
after the Government of India allowed new private banks to be established. Axis
Bank was jointly promoted by the Administrator of the specified undertaking of the
 Unit Trust of India (UTI-I)
 Life Insurance Corporation of India (LIC)
 General Insurance Corporation Ltd.
Also with associates viz. National Insurance Company Ltd., the New India Assurance
Company, The Oriental Insurance Corporation and United Insurance Company Ltd.

1.1 EVOLUTION:
UTI was established in 1964 by an Act of Parliament; neither did the Government
of India own it nor contributes any capital. The RBI was asked to contribute one-
half of its initial capital of Rs 5 crore, and given the mandate of running the UTI in
the interest of the unit-holders. The State Bank of India and the Life Insurance
Corporation contributed 15 per cent of the capital each, and the rest was
contributed by scheduled commercial banks which were not nationalized then. This
kind of structure for a unit trust is not found anywhere else in the world. Again,
unlike other unit trusts and mutual funds, the UTI was not created to earn profits.
In the course of nearly four decades of its existence, it (the UTI) has succeeded
phenomenally in achieving its objective and has the largest share anywhere in the
world of the domestic mutual fund industry. '' The emergence of a "foreign expert"
during the setting up of the UTI makes an interesting story. The announcement by
the then Finance Minister that the Government of India was contemplating the
establishment of a unit trust caught the eye of Mr. George Woods, the then
President of the World Bank. Mr. Woods took a great deal of interest in the Indian
financial system, as he was one of the principal architects of the ICICI, in which his
bank, First Boston Corporation Bank, had a sizeable shareholding. Mr. Woods
offered, through Mr. B.K. Nehru, who was India's Executive Director on the World
Bank, the services of an expert. The Centre jumped at the offer, and asked the RBI
to hold up the finalization of the unit trust.
Proposals till the expert visited India. The only point Mr. Sullivan made was
that the provision to limit the ownership of units to individuals might result in
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unnecessarily restricting the market for units. While making this point, he had in
mind the practice in the US, where small pension funds are an important class of
customers for the unit trusts. The Centre accepted the foreign expert's suggestion,
and the necessary amendments were made in the draft Bill. Thus, began corporate
investment in the UTI, which received a boost from the tax concession given by the
government in the 1990-91 Budget. According to this concession, the dividends
received by a company from investments in other companies, including the UTI,
were completely exempt from corporate income tax, and provided the dividends
declared by the investing company were higher than the dividends received.

The result was a phenomenal increase in corporate investment which accounted

for 57 per cent of the total capital under US-64 scheme. Because of high liquidity
the corporate sector used the UTI to park its liquid funds. This added to the
volatility of the UTI funds. The corporate lobby which perhaps subtly opposed the
establishment of the UTI in the public sector made use of it for its own benefits
later. The Government-RBI power game started with the finalization of the UTI
charter itself. The RBI draft of the UTI charter stipulated that the Chairman will be
nominated by it, and one more nominee would be on the Board of Trustees. While
finalizing the draft Bill, the Centre changed this stipulation. The Chairman was to be
nominated by the Government, albeit in Consultation with RBI. Although the
appointment was to be made in consultation with the Reserve Bank, the
Government could appoint a person of its choice as Chairman even if the Bank did
not approve of him.
Later on in 2002 the “UTI” was renamed to “Axis Bank”.

1.2 BUSINESS DESCRIPTION:

The Bank's principal activities are to provide commercial banking services which
include merchant banking, direct finance, infrastructure finance, venture capital
fund, advisory, trusteeship, forex, treasury and other related financial services.

1.3 CORPORATE PROFILE:

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Axis Bank is the third largest private sector bank in India. The Bank offers the entire
spectrum of financial services to customer segments covering Large and Mid-
Corporates, MSME, Agriculture and Retail Businesses.
The bank has a large footprint of 3,304 domestic branches (including extension
counters) and 14,163 ATMs across the country as on 31st March 2017. The
overseas operations of the Bank are spread over nine international offices with
branches at Singapore, Hong Kong, Dubai (at the DIFC), Colombo and Shanghai;
representative offices at Dhaka, Dubai, Abu Dhabi and an overseas subsidiary at
London, UK. The international offices focus on corporate lending, trade finance,
syndication, investment banking and liability businesses.
Axis Bank is one of the first new generation private sector banks to have begun
operations in 1994. The Bank was promoted in 1993, jointly by Specified
Undertaking of Unit Trust of India (SUUTI) (then known as Unit Trust of India), Life
Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC),
National Insurance Company Ltd., The New India Assurance Company Ltd., The
Oriental Insurance Company Ltd. and United India Insurance Company Ltd. The
share holding of Unit Trust of India was subsequently transferred to SUUTI, an
entity established in 2003.
With a balance sheet size of Rs. 6,01,468 crores as on 31st March 2017, Axis Bank
has achieved consistent growth and with a 5 year CAGR (2011-12 to 2016-17) of
16% in Total Assets, 13% in Total Deposits, 17% in Total Advances.

1.4 PROMOTORS :
Axis Bank Ltd. has been promoted by the largest and the best Financial Institution
of the country, UTI. The Bank was set up with a capital of Rs. 115 crore, with
 UTI contributing Rs. 100 crore,
 LIC - Rs. 7.5 crore
 GIC and its four subsidiaries contributing Rs. 1.5 crore each.
Axis Bank is today one of the most competitive and profitable banking franchise in
India. Which can be clearly seen by an analysis of its comprehensive portfolio of
banking services including Corporate Credit, Retail Banking, and Business Banking,
Capital Markets, Treasury and International Banking.

1.5 DISTRIBUTION NETWORK:

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The Bank has a network of 3,304 domestic branches (including extension counters)
and 14,163 ATMs across the country as on 31st March 2017. The overseas
operations of the Bank are spread over nine international offices with branches at
Singapore, Hong Kong, Dubai (at the DIFC), Colombo and Shanghai; representative
offices at Dhaka, Dubai, Abu Dhabi and an overseas subsidiary at London, UK. The
international offices focus on corporate lending, trade finance, syndication,
investment banking and liability businesses.

1.6 BUSINESS OVERVIEW: (Source Annual Report 2015-16)

1. Retail Banking
2. Corporate Banking
3. International Banking
1. Retail Banking
The Retail Banking segment continues to be a key driver of the Bank’s overall
growth strategy. It encompasses a wide array of products and services across
deposits, loans, investments and payment solutions which are delivered through
multiple channels to the Bank’s customers. The Bank has over the years developed
long-term relationships with its customers by being their preferred financial
solutions partner on account of its excellent customer delivery through insights and
superior services. The Bank has also succeeded in making banking simple for
masses by smart use of technology. The Bank has always focused on meeting the
financial needs of its customers by providing high quality products and services
through regular customer engagement in convenient manner.

During the year, the Bank continued to focus on increasing its retail deposits base,
particularly demand deposits. Savings Bank deposits crossed Rs. One lac crores and
have grown at a Compounded Annual Growth Rate (CAGR) of 21% over the last five
years. As on 31 March, 2016, the Bank had over 172 lac savings account customers,
registering a growth of 15%. As on 31 March, 2016, the retail term deposits grew
14.42% and stood at Rs. 121,955 crores, constituting 64.69% of the total term
deposits compared to 59.86% last year. The Retail Assets portfolio has grown at a
Compounded Annual Growth Rate (CAGR) of 31% over the last five years. The Bank
continued to increase its share of retail loans to total advances which stood at 41%
compared to 29% in March 2012. Including SME loans that qualify as regulatory
retail, the share of retail loans to total loans would be 46%. The retail loans
portfolio continues to be focused on secured products, predominantly mortgages.
Secured loan products accounted for 86% of retail loans, of which Home loans
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accounted for 45%, retail agricultural loans accounted for 17%, auto loans 9%,
loans against property 8%, personal loans and credit cards were 11%, while non-
schematic loans comprising loan against deposits and other securities accounted
for 10%.

2. Corporate Banking

The corporate banking space in India is recovering from its own set of challenges.
The issues at hand on the corporate side range from excess capacities in many
sectors to increase in leverage on corporate balance sheets. Resolving the asset
quality issues remain a top priority for the Government and the Regulator to get
back to a sustainable economic growth path. Asset quality recovery is linked to how
the economy turns around and it will happen gradually but the silver lining stems
from the fact that, while the high debt is concentrated in only a few sectors, the
balance sheets of the other segments and sectors remain relatively robust.
However, despite these challenges the private sector banks have continued to gain
market share by delivering above industry growth rates. This trend is likely to
continue in the near future; however the preference is for a much healthier and
well capitalized banking sector for overall swifter revival in the country’s economic
growth.

The Bank has disclosed a watch list of 22,628 crores which is assessed to be
the key pool of potential future stress in the corporate lending book over the next
two years. Iron and Steel and Power sectors comprise 47% of this list. The Bank
would maintain adequate provision coverage levels and also build up its contingent
provision buffers.
The Bank has been cautious in its lending practices, especially in the last three
years by focussing on higher rated corporates. However, due to the significant price
and demand correction witnessed globally in the metal and minerals sector, the
outlook for the sector remains cautious. A major proportion of the Bank’s these
exposures relate to large integrated players with stronger balance sheets that are
better equipped to meet the challenges currently witnessed by the sector. More
recently price volatility across commodities appears to have stabilized and suggests
mild recovery prospects.
The bank has maintained its leadership position in the loan syndication market and
syndicated an aggregate amount of `22,613 crores (previous year `15,930 crores) by
way of rupee loans and USD 1.93 billion (previous year USD 1.55 billion) of foreign
currency loan during the year 2015-16.

3. International Banking

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The International Banking strategy of the Bank continues to revolve around
leveraging its relations with corporates in India and Non-resident Indians, while
providing banking solutions at overseas centres. The Bank, through its international
operations, leverages the skills and strengths built in its domestic operations. It also
widens the horizon of the product offerings covering a varied spectrum of
corporate and retail banking solutions across client segments in various
geographies. The Bank has established its presence at strategic international
financial hubs in seven countries. The global landscape of the Bank consists of five
branches at Singapore, Hong Kong, Dubai International Financial Centre (DIFC) –
UAE, Colombo (Sri Lanka) and Shanghai (China); three representative offices at
Dubai, Abu Dhabi (both in UAE) and Dhaka (Bangladesh); and an overseas banking
subsidiary in the United Kingdom. The representative office at Dhaka was
inaugurated during the current financial year.

The Bank continues to offer corporate banking, trade finance, treasury and
risk management solutions through the branches at Singapore, Hong Kong, DIFC,
Shanghai and Colombo, and also retail liability products from its branches at Hong
Kong and Colombo. Further, the Bank’s Gulf Co-operation Council (GCC) initiatives
in the form of representative offices in Dubai and Abu Dhabi, and alliances with
banks and exchange houses in the Middle East provide support for leveraging the
business opportunities emanating from the large NRI diaspora present in these
countries. Through the Representative Office at Dhaka, the Bank aims to promote
its trade finance business arising between Bangladesh and India & other Asian
financial markets where Bank has presence. Secondary market risk participations,
pertaining to Bangladeshi banks, being presently done by the foreign branches of
the Bank, will also be captured at the primary level itself enabling the Bank to
move up the value chain and enhance its risk return.

Given the uncertainties in global economies coupled with decline in Indian

international trade, the Bank focussed on consolidating the operations at overseas
branches and managing the risks in international operations. Emphasis continued
towards trade finance business and value added services. As on 31 March, 2016,
the total assets at overseas branches stood at USD 8.06 billion as compared to USD
7.86 billion last year. Axis Bank UK Limited, the Bank’s overseas banking subsidiary,
completed its third year of operations during the year under review and its total
assets stood at USD 662 million as against USD 431 million as on 31 March, 2015.

1.8 VISION & VALUE:

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 Vision of the Bank
To be the preferred financial solutions provider excelling in customer
delivery through insight, empowered employees and smart use of
technology.

 Core Values
• Customer Centricity
• Ethics
• Transparency
• Teamwork
• Ownership

1.9 BOARD OF DIRECTORS:

Board of Directors
Chairman & Independent Sanjiv Misra

Director
Managing Director & CEO Shikha Sharma

Independent Director Prasad R Menon, Samir K Barua, Som

Mittal, Rohit Bhagat, Srinivasan

Vishvanathan, Rakesh Makhija, Ketaki

Bhagwati
Deputy Managing Director V Srinivasan

Director Usha Sangwan, B Babu Rao

Company Secretary Girish V Koliyote
Executive Director Rajiv Anand, Rajesh Dahiya