RBI Approves Axis Bank’s ₹1,500 Crore Capital Infusion Into NBFC Unit

Axis Bank on Wednesday said it will invest ₹1,500 crore in its consumer lending arm, Axis Finance, through a rights issue. The Reserve Bank of India (RBI) approved the investment in a letter dated 10 March.

The capital infusion will be made in one or more tranches and is expected to be completed by 31 March 2027. The initiative follows a re-evaluation of the strategy by the bank after halting plans to divest a stake in the non-bank finance company (NBFC).

Why Did Axis Bank Pause Stake Sale Plans?

Axis Bank had planned to sell about a 20% stake in Axis Finance, with the deal expected to be worth $350-400 million. Merchant bankers, including Morgan Stanley, were handling the process.

The plan, however, was put on hold after the RBI updated its rules in December 2025. The new norms allow banks to run some overlapping business with their subsidiaries, as long as these operations remain separate from core banking activities.

As a result, Axis Bank is rethinking how and when to go ahead with any stake sale in Axis Finance.

How Is Axis Finance Performing?

Axis Finance has continued to grow steadily over the last few years:

• Turnover increased to ₹4,296 crore in FY25 compared to ₹3,321 crore in FY24 and ₹2,297 crore in FY23.

• The assets under management (AUM) were ₹415.83 billion as of March 31, 2025.

Axis Bank has steadily backed Axis Finance, putting in ₹23.75 billion (₹2,375 crore) over the last decade. The scale of this investment shows the bank’s long-term commitment to the business.

The NBFC is now set to present a revised growth roadmap to the bank’s board in April, after which it will reassess its future capital-raising requirements.

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What Does This Mean For Investors?

To the investors, the move represents a transition between a partial monetisation and full ownership-led growth. Axis Bank is deciding to roll out its NBFC business rather than dilute its stake as it is convinced that the segment has long-term potential.

The influx of capital may facilitate expansion of loan books, product diversification and improved market positioning in consumer lending. It further indicates that regulatory clarity has minimised previous doubts about the business structure.

Investors, however, must monitor the efficiency of this capital to translate into growth, asset quality, and return ratios because NBFC expansion may have greater risk with greater returns.

Sources:

Economic Times

Business Standard