Term Project in

Strategic Management

A study of the corporate strategy of Axis Bank

Group number: 4

Members:

Roll number Name

16PGDMBFS16 Bhawna Satija
16PGDMBFS17 Chandrasekhar Satapathy
16PGDMBFS18 Daman Mahajan
16PGDMBFS19 Deep Ghose Dastidar
16PGDMBFS20 Deepanshu Bhanot
 Index

Serial No. Topic Page Number

6 Challenges and Recommendations

7 Exhibits 1-16

8 Reference

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 Acknowledgements

We take this opportunity to express our profound gratitude and deep regards to all our
management faculty members for giving us this extraordinary project and for their
exemplary guidance, monitoring and constant encouragement throughout the course of this
project. We are grateful to Prof. Sonu Goyal who has been very kind and patient while
suggesting us the outlines of this project and correcting our doubts.

We are obliged to the staff members of the IMI Library, for the valuable information
provided by them. We are grateful for their cooperation during the period of the
assignment. In writing this project we have been benefited immensely by referring several
newspapers and books. We express our gratitude to the authors, publishers and institutions
for all such papers and books.

We also thank Rashi Arora, Manager at Axis Bank for clearing our doubts from time to time.
She has been a constant support throughout the project. We appreciate her kindness and
thank her for her valuable time and inputs. We would also like to thank the branch head of
HDFC bank, Mr. Rahul Mehra for interacting with us. We also would like to thank various
customers who agreed to be interviewed and gave their valuable insights for the bank.

Lastly, we thank almighty, our parents, siblings and friends for their constant
encouragement without which this assignment would not be possible.

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 Indian Banking System

Modern banking in India started in India in the late 18th Century. One of the founding
institutions of modern banking in India, Bank of Hindostan was established in 1770, later
dissolved in the 1830s. The oldest and, still, in existence is the State Bank of India (SBI),
which originated as Bank of Calcutta in 1806, and was also called as Bank of Bengal (1809-
1921). It then merged with two other presidency banks viz, Bank of Madras and Bank of
Bombay, to form the Imperial Bank of India in 1921. Imperial Bank of India was later
renamed as SBI, following the SBI Act 1955. SBI is also the largest bank in India. Until the
Reserve Bank of India was formed in 1935, under RBI Act 1934, these presidency banks
acted as quasi-central banks.

SBI was granted the control of eight state-associated banks under the SBI (Subsidiary Banks)
Act, 1959. Following this, the government nationalised 14 major private banks in 1969 by
the Banking Companies (Acquisition and Transfer of Undertaking) Bill. In 1980, 6 more
commercial banks were nationalised. At present the number of nationalised banks in India
stands at 19, with the merger of two nationalised banks in 1993 viz, New Bank of India with
Punjab National Bank. A wave of liberalisation hit the banking sector when a small number
of private banks were licensed in the early 1990s. These new banks, dubbed as the New
Generation Tech-savvy banks, included Global Trust Bank (later, merged with Oriental Bank
of Commerce), UTI Bank (renamed Axis Bank), ICICI Bank, and HDFC Bank. Moreover, the
liberalisation also brought about changes in the management of banks, and allowed foreign
investors to buy more than 10% stake (the norm before liberalisation).

At present, banks in India are broadly classified into Scheduled banks and Non-scheduled
banks. Those which are listed in the Second Schedule of the RBI Act, 1934 are regarded as
Scheduled banks. Scheduled banks are categorised as cooperative banks and commercial
banks, which is further segregated into five different categories.

With the move to a digital society seemingly apparent within the next decade. RBI
conceptualised a new model of banks in 2014. The banks are licensed as Payments Banks
under Section 22 of the Banking Regulation Act, 1949, and are to be registered as public
limited company under the Companies Act, 2013. These banks are allowed to accept a
restricted deposit, currently capped at Rs. 1 lakh per customer, but cannot issue loans or
credit cards. Payments banks can issue services like ATM cards, debit cards, online banking
and mobile banking.

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 Key Industry Trends

According to World Banks database, around 53% of Indian population aged 15 and above
had an account at a formal financial institution in 2014, which rose from 35% in the 2011
survey. However, some basic financial products are still at low penetration, like, only 22%
had a debit, 4.2% had a credit card and 3.7% had taken mortgage. This led both the
government and RBI to push for a rise in the financial inclusion of the country. Many
initiatives were implemented at the national level, like, simplified but mandatory Know Your
Customer (KYC) norms, boost to NBFCs and Micro-finance institutions focussed in the rural
markets, Pradhan Mantri Jan Dhan Yojana (PMJDY), and support for the growth of the
Financial Technology (FinTech) startups. As per RBI estimates, the number of bank branches
and outlets in the rural areas increased nine folds to 5,90,000 in the span of past 6 years.
Also, in-principle approvals for Payments Banks were awarded to eleven applicants on
August 19, 2015 and, on 16th September ten in-principle approvals were granted for setting
up Small Finance Banks (SFB). Secondly, on 1st August 2016 guidelines regarding On Tap
licensing of private sector Universal Banks were released.

Technology leverage in the retail banking came out to be a game changer in the Indian
financial landscape. The cost-effectiveness helped reach last-mile finance and thus boosted
financial inclusion. To provide a greater impetus to card-based retail payments, an
Acceptance Development Fund (ADF) is under development to step up the infrastructure.
The Unified Payments Interface (UPI) was launched on 25 th August 2016 to give a boost to
mobile banking, given the fast growth in mobile penetration in the country. Apart from the
technology used in mainstream banking systems, the past years witnessed the entry of a
number of alternative tech-based financial service providers, known as FinTechs. These
alternative institutions not only improve competition in the financial sector, but also is being
seen as an opportunity for collaboration with traditional banks to meet the ever-evolving
expectations of customers. Accordingly, RBI set up an inter-regulatory working group to
examine various aspects related to FinTech innovations and the related risks and
opportunities.

The domestic banking sector, primarily the public sector banks are plagued with a huge
Non-Performing Assets (NPA) and related provisioning. The Gross NPA ratio is rising steadily
and was at 9.6% in March 2017, from 9.2% in September 2016. To revitalising distressed
assets, in 2016 RBI introduced the Scheme for Sustainable Structuring of Stressed Assets
(S4A) for a deep financial restructuring of large accounts. In addition, the selling of stressed
assets by banks was streamlined to facilitate better valuation, price discovery and hence
creation of a vibrant market for stressed assets.

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To mobilise the additional capital for meeting the Basel III regulations, ownership caps in
private banks were rationalised. Also, the Net Stable Funding Ratio (NSFR), factoring the
funding resilience of banks for long terms, were laid down. This is targeted to limit the
banks dependence on short-term wholesale funding and promote funding stability.

Also with the emergence of virtual cryptocurrencies like Bitcoins, the blockchain distributed
ledger technology was introduced. Distributed ledger eliminates the need for supervision,
infrastructure and associated costs, by utilising an open peer-to-peer network. As per a
report by Capgemini, 15% of the worlds top banks are expected to launch commercial
blockchain products by end of 2017, while 65% of banks would have blockchain projects in
development in the next 3 years. Also, distributed ledgers mitigate the risk of hacks, which
had been the reason of some major losses in the past few years globally.

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 SWOT Analysis

Strengths

It has been showing good growth in banking industry sector.

It is offering various services and products ; Credit cards, consumer banking, corporate
banking, finance and insurance, investment banking, mortgage loans, private banking,
private equity, wealth management.

Axis bank market share is increasing in rural areas.

It is among the largest bank in India which is providing Agriculture loans.

Axis bank is among the top three positions with respect of fastest growth in private sector
banks

It has around 2400 domestic branches and 8000+ ATMs.

The bank has its presence in 971 cities and towns.

It has seven International offices.

It has been offering advance E-banking services to its customers.

Strong marketing & branding; one of the top Bollywood actress was signed as a brand
ambassadors.

It has strong work forces of 42,000 + employees.

Axis bank provides opportunity to young talent; average age of an employee in Axis Bank
is 29 years.

Axis Bank has Foundation which has been supporting the supplementary education.

Axis Bank has established partnership with NGOs for educating needy and special kids in
13 states.

Weaknesses

It has limited branches as compared to its direct competitors.

Less number of International branches.

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Opportunities

Rising rural income pushing up demand for banking

Market development in International markets

Threats

Threats of NBFCs and mobile wallet companies

Tough competition of foreign banks

Fierce competition

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 STRATEGY OF AXIS BANK: - INTERNAL AND EXTERNAL

RETAIL BANKING

Retail banking has been the backbone of the banks overall growth strategy in the last few
years. It covers a wide range of products and services across deposits, loans, investments
and payment solutions that are delivered through multiple channels. The bank has
developed long-term relationships with its customers by being their preferred financial
partner on account of its excellent customer delivery. The Bank continues to focus on
leveraging technology to innovate for next generation banking products and services.
Customer Centricity is one of the organizational values and a core pillar of the Banks vision.
By pursuing this customer centric approach, the Bank aims to meet financial needs of
customers through innovative products and services backed by world-class service and
delivery models.

Retail Deposits
o The Bank pursues an effective customer segmentation strategy and has over
the years built a sustainable retail deposit franchise.
o It continued to focus on increasing its retail deposits base, particularly
demand deposits. Savings Bank deposits grew March, 2017, the Bank had
over 202 lakh savings account customers, registering a growth of 17%.
Considering the advantages which an Recurring Deposit brings to overall stickiness,
the bank has recently launched a new and improved version of the RD.

NRI & Affluent Segments

The Bank offers a complete suite of banking and investment products under its NRI
services for Indians living and working abroad.
o It introduced Enhanced Set-Off facility at portfolio level for Portfolio
Investment Scheme (PIS) Accounts applicable for short term equity
transactions only.
o The Bank also launched the Online Appointment Booking Module with a
customized workflow for the NRIs during their visit to India.
o It introduced an enhanced paperless Online NRI Account Opening Module
which reduced the need for physical documents for account opening.

Retail Loans
o The retail assets portfolio has grown at a CAGR of 28% over the last 5 years.
o Total retail loans grew at 21%.
o The retail loans portfolio continues to be focused on secured products,
predominantly mortgages.
o Secured loan products accounted for 85% of retail loans, of which Home

Group 4: Axis Bank Page 9

 loans accounted for 44%, retail agricultural loans accounted for 16%, auto
loans 10%, loans loans accounted for 10%.

Technology and Digital Banking

Digital initiatives continue to be the cornerstone of the Banks effort in enhancing
the banking experience for its customers. Axis Bank ensures that it is at the top of
the digital innovation curve through exhaustive user research, rigorous analysis of
customer complaints & requests and scanning the environment for latest digital
solutions.
o Axis Bank launched Axis Pay, the UPI based app that allows customers of any
bank to transfer money to any other bank by just creating an unique virtual
payment address.
o Integrated its Lime Wallet and UPI functionality within Axis Mobile.
o The Bank launched an improved and responsive version of its website
www.axisbank.com that allows desktop webpages to be viewed optimally on
different browsing devices.
o Also launched Axis Active in partnership with GoQii that serve both as a
fitness band and NFC based payment device.
o Launched Insta services on both Internet and Mobile banking platforms
wherein eligible customers can change their personal details by just
uploading supporting documents online, thus avoiding the hassles of visiting
the branch.
This collaborative approach was the cornerstone of the Best Digital Bank award that
the Bank earned from Business Today.

Payments
The retail payments franchise remains central to the Banks overall retail strategy, as
it is mutually beneficial for the customer and the Bank. The customer benefits from
the cutting edge processes and services offered and in turn prefer to transact more
as the trust and convenience factor builds up leading to more business opportunities
for the Bank. Axis Bank is one of the largest debit card issuers in the country, with a
base of over 202 lakh customers. The credit cards portfolio saw a substantial
increase in spends by 47%, to Rs 28,585 crores from Rs 19,432 crores last year.

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 Investment Products
o The bank distributes investment products such as mutual funds,
bancassurance products (Life, Health and General Insurance) and online
trading through its branches.
o Axis Bank is one of the leading banking distributors of mutual funds in India
and distributes mutual fund products of all major asset management
companies. The fee income from this segment contributed around 9% to the
total Retail Banking fees.
o The Bank offers online trading services to its customers in collaboration with
Axis Securities Ltd. (a 100% subsidiary of the Bank) under the name Axis
Direct.
o The bank distributes broad range of Alternative Investment products such as
Discretionary Portfolio Management Services, Private Equity & Real Estate
Funds & Structured Products.

Financial Inclusion
Axis Bank regards Financial Inclusion (FI) as an integral component of its rural strategy
to further extend its reach in the rural market. During the fiscal 2017, Bank focused on
not only mainstreaming the unbanked and under-banked people through opening
basic savings account but also deploying business correspondents for last mile
connectivity.
o As of 31 March 2017, the Bank is reaching out to customers in the
unbanked and under-banked locations through 538 branches along with
1,738 business correspondents.
o During fiscal 2017, 4.60 lakh basic savings accounts were opened and 8.40 Lakh
Aadhaar authenticated payments were done.
o Along with the rural presence, 14,833 business correspondents have been
deployed in non-rural areas to enable people working there to conveniently
make domestic remittances to their family.
o Overall, 25,550 crores were remitted through the business correspondents.

CORPORATE BANKING

The Bank's gross corporate advances portfolio grew by 5% during the fiscal year 2017, even
as net corporate advances grew by 0.33%. The growth has been on account of cost efficient
re-financing provided to better rated corporates with strong group financials.

During the year, the Bank renewed its focus on faster delivery of products and services to
better rated corporates. Approximately 85% of new sanctions in the corporate book were
to companies rated 'A' and above.

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The Bank's strategy of Portfolio diversification through sectoral approach to credit
continued where the focus was on identifying sector-specific opportunities and risks.
Industry, group and company

specific exposure limits have been defined by the Bank and continuous monitoring is
undertaken with a view to identify risk and take proactive decisions to mitigate them. The
concentration risk has seen a consistent decline in the last few years with exposure to top 20
single borrowers as percentage of tier 1 capital at 124% as on end March 2017, as compared
to 283% at the end of fiscal 2010.

STRUCTURED FINANCE GROUP (SFG)

Axis Bank's SFG is a specialized group focusing on resolution of non-retail

impairments of the Bank.
The slowdown in the corporate growth along with the large corporate debt burden
has led to considerable stress on the balance sheets.
Entities with project finance and term lending expertise, which have financed the
infrastructure growth, have been impacted much more than other financiers.
During the fiscal 2017, the challenged sectors like power, steel and infrastructure
construction continued to weigh on the banking sector's asset quality.

The Government and the Regulator have shown keen interest to alleviate and resolve the
asset quality issues and get the economy back to a sustainable growth path. The policy
initiatives of the Government like imposing import duties in certain segments like steel,
focused approach in removing policy and regulatory constraints to revive the stalled projects
and getting the Goods and Services Tax (GST) bill passed, with renewed focus on
infrastructure, renewable and railways have helped improve the corporate sentiment.

The SFG group is skilled to handle the changing regulatory landscape, and has been using
the resolution mechanisms available to address the stressed portfolio.

TREASURY

The Banks Treasury function comprises of: -

Asset Liability Management (ALM),

Proprietary trading business in Interest rates & Equity
The proprietary trading group in Government securities within Treasury
plays an important role of market making, participating in primary
auctions of RBI etc. The Bank also holds one of the largest Corporate
bond investment portfolio with 92% of them have rating of at least 'A',
and runs limited trading book in Equity, Commercial papers and

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 Certificate of deposits.
Foreign Exchange & Derivatives
Forex Trading Group is a major participant in the Foreign Exchange &
Derivatives market. The group provides risk management and hedging
solutions to a wide range of corporate customers and financial
institutions.
Arrangership business.
The Bank continues to remain a dominant player in the Debt Capital
Market (DCM) segment. During the year, the Bank arranged 2199,620
crores of bonds and debentures for various PSUs and corporates.

The Bank has started the International Debt Capital Markets business and has been a leader
in this segment covering USD/EUR bonds, Masala bonds, Green bonds etc. The Bank became
the first Indian entity to issue internationally listed certified dollar denominated Green bonds
in June 2016.

TRANSACTION BANKING

Transaction Banking unit focuses on the flow businesses, i.e. current accounts,
collection & payments solutions, trade services, forex remittances and capital market
solutions.
It caters to corporates, SMEs, financial institutions, Government segment and also to
retail customers for their forex requirements such as forex cards and wire transfers.
The key financial deliverables of the business are current account float balances
and fee income.

The key strategy that the business has been focusing are deepening share of wallet for
existing clients, offering digital solutions to customers and enhancing customer service. The
relationship managers and branches are continuously equipped with analytical tools and
learning interventions to help cross-sell the large suite of transaction banking products to
customers.

Current Accounts
o The Bank has over 1.7 million current accounts across its branch network
served with a wide range of segmented and value-based offerings.
o The Bank has also significantly invested in complementing the branch
network with digital channels such as Internet banking and mobile banking,
and also self-service solutions such as cash deposit machines.
o It also enables customers to tailor the product features to suit their
individual requirements.
o The Bank has taken several initiatives to deepen the current account
relationships by cross-selling other products such as tax payments, cash
management solutions, loans, forex and trade products, etc.

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 Cash Management Solutions
o The Bank provides end-to-end cash management solutions by combining
efficient collections and disbursements products, backed by state-of-the-art
systems to ensure customized delivery.
o By leveraging on the Bank's extensive network and robust technology, these
solutions provide faster fund movement thereby reducing interest rates and
improving customer's liquidity position.
o Cash management products include digital collection and payment solutions,
offerings for collection of cheques and cash as well as bulk payment solutions
for vendor, salary, interest and dividend payments
Government Business
The Bank has been authorised by Reserve Bank of India and Government of India to
handle all Government Banking transactions which includes the following:
o Collection of Direct and Indirect Taxes
o Disbursement of Central Civil as well as Non-Civil (Railways, Defence,
Telecommunication and Posts) Pensions
o Expenditure-related Payments on behalf of various Ministries/
Departments of Govt. of India
o State Government related transactions such as collection of Sales Tax,
Pension Payments, etc.
Trade, Forex and risk management Services
o The Bank offers a complete suite of Trade finance and foreign exchange
business solutions through Forex "B" category branches spread across the
country.
o The Bank also offers a variety of hedging solutions such as exchange and
interest rate derivative structures, including options and swaps in accordance
with the derivative policy of the Bank.
o In addition to having dedicated resources at the branches, the Bank has also
stationed experts at various locations to provide advice on regulations
governing trade and forex business and suitably customize offerings to meet
specific needs of its customer.
International Retail
o Axis Bank offers a range of forex and remittances products to its retail
customers, which include forex cards, inward and outward wire transfers,
traveller's cheques and foreign currency notes.
o The Bank continued to have a market leadership position in forex cards
with 16 currency options other than INR.
o The aggregate load value on forex cards crossed USD 8 billion during the
year.

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 Custodial and Capital Market Services
Under the custodial business segment, Axis Bank offers a full range of custodial and
fund accounting services for primary and secondary market operations involving
debt, equity and money market instruments.

LENDING TO SMALL AND MEDIUM ENTERPRISES

Small and Medium Enterprises (SME) remain an integral part of the Indian Economy. The
Bank supports for growth in this sector. Currently the Bank operates from 54 SME Centres
and 15 SME Cells across the country to service customer effectively covering more than
2,000 branches

SME advances grew by 10% to 249,172 crores from 244,869 crores last year.
The SME portfolio of the Bank constituted 13% of the Bank's total advances as on 31
March, 2017.
The SME Business in the Bank continues to focus towards lending to the Priority
sector (PSL) and is a significant contributor to the Bank's overall PSL portfolio.
As part of the strategy to focus on select important industrial clusters, the Bank
launched a new product catering to the Education sector.

The Bank has a wide range of customized and fast track products for SME customers and has
robust processes in place ensuring that the customer gets the best financial solution and
consistent quality of service which suits his requirements. Building on the same platform,
the Bank streamlined various internal processes on the digital platform leading to seamless
services offered to the customer.

INTERNATIONAL BANKING

The International Banking strategy of the Bank continues to revolve around

leveraging its relationships with corporates in India and non-resident Indians, by
providing banking solutions at overseas centres.
The Bank, through its international operations, leverages the skills and strengths
built in its domestic operations.
It 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. The
Bank has a small but strategic international network that consists of five branches at
Singapore, Hong Kong, Dubai, Colombo, and Shanghai; three representative offices
at Dubai, Abu Dhabi and Dhaka; and an overseas banking subsidiary in the United
Kingdom.

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BUSINESS INTELLIGENCE UNIT

From self driven car to chat BOTs, Al and Machine Learning are revolutionizing customer
experience and decision making across industries globally. Being a bank for millions of
aspiring Indians, Business Intelligence Unit of the Bank is also on the forefront for building
& implementing Al and machine learning solutions in banking areas such as identification
of customer base for pre-approved loans, creation of personalized product
recommendations, branch and ATM location planning, identifying fraudulent transactions
and to prioritize investigation on complex money laundering transactions.

Set up in 2009, Axis Bank BIU started with providing analytical solutions to Retail
Lending Business.
Over these years, BIU, with 200+ in-house data scientists, is now developing
solutions across Retail Banking, Wealth Management, Payments and Corporate
Banking.
In 2016, they set up "Thought Factory", an innovation lab of Axis Bank, to build
scalable capabilities in Al and Machine learning to make customer banking
experience intelligent, intuitive and instant.

INFORMATION TECHNOLOGY

The Bank has undertaken various technology enabled business strategies to realize the
vision of customer centricity and to respond to customer demand in real time by knowing
its customers and their behaviour, and to offer a single view across all the bank's products
and services.

The Bank is among the leading banks in India to launch image based disbursement
of tractor loans that has led to improvement in turnaround time by 2 days.
Contact Centre capabilities are augmented to facilitate integrated and consistent
interactions across all channels.
The state of the art digital contact centre consists of speech analytics for better
service. The Bank has also implemented in online chat module for its premium
customers.

Delivering on the vision of an instantaneous, intelligent and interconnected payment

ecosystem, the Bank has undertaken major initiatives in the payment space in fiscal 2017.

Axis Pay App was launched by the Bank using UPI allowing customers to send or
receive money, pay bills, recharge and shop with a single Virtual Payment Address
(VPA).
The Bank has built a customizable online payment gateway platform for corporate
customers to process invoices seamlessly.

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 The Bank has launched Bharat Bill Payment System (BBPS) based billing for select
utility payouts.
The Bank in association with Bengaluru Metropolitan Transport Corporation (BMTC)
has launched 'Axis Bank BMTC Smart card',
The Bank is the first bank to launch NPCI (National Payments Corporation of India)
integrated interoperable RFID (Radio Frequency Identification) tag for providing
Electronic Toll Collection service for customers.

KEY SUCCESS FACTORS OF THE PRIVATE BANKING INDUSTRY

Key success factors refer to those factors, which are important to future competitive success
of the industry. It is very important for the companies to understand the landscape of
industry in order to identify the most important competitive success factors. Due to changes
in driving forces and competitive conditions, the key success factors of one industry differ
from other. The key success factors of banking industry is discussed below.

Technology

Latest technology plays a very important role in the banking industry.

It helps in introducing innovative products according to the demand of consumers.
Technology can be used to lower down the cost of transaction and improve the
quality of products. For example when the banks realized that they can lower down
their transaction cost by installing ATMs and debit cards.
Online banking is increasing tremendously due to rapid technological change.

Best Rates

Industry of virtual banking is attracted by low cost.

Competition is such high that to survive in industry low cost is very important.
As virtual banks have no physical existence of branches and ATM network so they
have great advantage to offer their products at lower rates than brick and mortar
banks.

Product Innovation

Product Innovation is one of the major success factors in the banking industry, Since all the
banks are offering similar products therefore differentiation is very important for the future
survival. Banks are trying to come with different innovative products in order to
differentiate themselves from other banks.

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Quality

Service Quality includes all the dimensions of quality, which the consumers want.
Brick and mortar banks have the advantage to directly contact with the customers
due to which customers feel satisfaction.
On the other hand, in virtual banks there is lack of person-to-person contact which
forced consumers to resolve their problems over the phone or via E-Mail.

Size Of The Company

Size of the company is an important key success factor. In banking industry size of bank
refers to the total market share, total assets, total number of branches and ATMs, total
number of customers etc. Brick and mortar banks have a good market share due to which
they can compete effectively. Contrary, virtual banks have relatively lower market share in
USA banking industry, which is a major problem for them.

Location And Convenience

It is important to note that convenience attracts consumers.

If a bank has wider network then it will be convenient for the customers to make
transactions easily.
In this case virtual banks have advantage over brick and mortar banks.
Internet only banks can be accessed any where in the world through internet.
The growth of the internet in the last few years, has forced many brick-and-mortar
banks to consider and develop online banking.

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ACQUISITION OF FREECHARGE

The acquisition of FreeCharge business gave Axis Bank access to about 52 million
mobile wallet holders of FreeCharge as well as about 150 to 200 professionals.
It re-affirms Axis Banks determination to lead the journey of digitization of financial
services.
They expect FreeCharge to contribute significantly in their aspiration to serve the
digital native and mobile-first young consumers of India.

FreeCharge users are digitally savvy and hence, if the bank is able to leverage them, it will
have ample opportunities to cross-sell products.The cost of customer acquisition is lower on
the digital platform.

Critics questioned the rationale of the acquisition, especially since Axis Bank already has a
large presence in the digital space and the capabilities to build its own platform. The bank
has integrated mobile wallet LIME, it offers Unified Payment Interface (UPI) payments via
Axis Pay, and also has a better market position in point-of-sale terminals, forex and credit
cards.

The acquisition shows that the bank is keen on aggressive expansion in the payments space.
The deal is subject to regulatory approval from the Reserve Bank of India (RBI).The deal
gives Axis Bank the ammunition to take on its rivals like HDFC Bank and State Bank of India
who have become aggressive in the digital payments space. Axis Bank also has its own
wallet, PayGo, but it remains to be seen if the lender chooses to retain the latter brand
name post the acquisition.

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 Challenges faced and Recommendations

Challenges being faced by Axis Bank:

Lacking on sufficient physical presence.

Bank Number of Number of ATMs

Branches
ICICI 4,450 14,131
HDFC 4,281 12,054
Axis Bank 2,904 12,743

Government Policy Interventions.

Example: Axis bank was fined an amount of 5 crore for not following the KYC procedure
which was the highest paid out of all 25 banks that defaulted.

Banks net interest margin, an operational metric that measures profitability, has been
considerably low for three consecutive quarters. Thus, in the near future, maintaining its
margin is a challenge for the bank.
Lack of operational excellence: Many instances of lethargic and laid back services have
been encountered. (Number of complaints received and issues of other banks given in
exhibit 9, 10)
Bank is losing its customer base due to various possible reasons such as:
Slight deterioration of efficiency of staff
High charges for different services.
High NPAs.
The gross NPA for Axis bank has taken a leap of 50% from previous quarter. The Gross
NPA figures have reached 9,553 crores. (refer exhibit 10, 11)
With a market full of competitors, Axis Bank lacks in innovative products & services
offered to its customers. (graphical representation of consumer survey given in exhibit
12)

Recommendations for Axis Bank

Axis bank needs to position itself deeper into the mind space of customers. Apart
from incorporating a viable business model, it needs to work on increasing its
physical presence by incorporating services in rural, semi urban and urban customer
segments.
It should follow the RBI guidelines properly while also keeping its profitability intact.
Catering and improving basic customer requirements, such as unclean ATMs, delays
in receiving statements, faster query processing and complaint resolution.

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 The bank should conduct a thorough and objective credit assessment before
rendering loans. If the debtors do not pay interests regularly, their accounts slip into
NPA category. Thus, bank should at least ensure the recovery of interest portion.
To build up a large loyal and profitable customer base, Axis Bank should either
increase its efficiency in terms of services offered or improvise on its processing
charges accordingly. Thus increasing its value proposition.
Comply with future market trends: The need for innovation in products and services
offered should be constantly taken care of.

Group 4: Axis Bank Page 21

 Exhibits

Exhibit 1: Classification of Indian Banks

Exhibit 2: Product Offerings of the bank

1 Saving Account Easy Access Savings Account, Prime Plus Savings Account,
Pension Savings Account, Insurance Agent Account, Small Basic
Savings Account, Prime Savings Account, Women's Savings
Account, Trust/NGO Savings Account, Youth Account, Future
Stars Savings Account, Senior Privilege Savings Account, 3-in-1
Online Investment Account, Basic Savings Account
2 Current Account Resident Foreign Currency (Domestic) Account, Current Accounts
by Industry, Regular Current Accounts, Exclusive Current
Accounts
3 Corporate Salary Easy Access Salary Account, Defense Salary Account, Prime Salary
Account Account, Wealth Salary Account, Priority Salary Account,
Employee Reimbursement Account
4 Inaam Personal --
Account

5 Safe Deposits Semi-Urban, Rural, Metro/Urban

Locker
6 Deposits Fixed Deposits, Recurring Deposits, Encash 24, Interest Rates, Tax
Saver Fixed Deposit, Fixed Deposit+)
7 Loans Home Loans, personal loans, car loans loan against property, gold

Group 4: Axis Bank Page 22

 loans, loan against securities, loan against fixed deposits, loans
against shares, education loan
8 Debit and credit --
card

9 Forex Multi-Currency Forex, Travel Currency Card, India Travel Card,

Outward Remittances, Send Money to India, Foreign currency
travellerscheque, Foreign currency cash, Foreign exchange rates
10 Investments Gold Mohurs, Demat Account, 8% Savings bond, PPF (Public
Provident fund), Silver Mohurs, Onlne Investment with
AxisDirect, Alternate Investment Products, Mutual Funds,
IPOSmart, Atal Pension Yojana
11 Premium Banking Axis Priority, Burgundy
12 Payment Services Instant recharge, pay bills and shop, pay taxes, receive pension,
transfer funds, online donations

Exhibit 3: Sub classification of fees charged

Initial Funding, Average Balance Required (Metro), Account Service Fee (Metro),
Average Balance required (Urban), Account Service Fee (Urban), Average Balance
Basic Required (Semi Urban), Account Service Fee (Semi Urban), Average Balance
service Required (Rural), Account Service Fee (Rural), Total Relationship Value (for all
charge locations), Primary Card: Issuance Fees, Primary Card: Annual Fees, Joint Card:
Issuance Fees Joint Card: Annual Fees, My Design Card Issuance, CHIP & PIN
enabled card Issuance, Cheque book Issuance, DD/PO Issuance, Account
Closure
Daily withdrawal limit and Shopping limit, Monthly Cash Transaction Free Limits
(Metro/Urban), Monthly Cash Transaction Free Limits (Semi-Urban/Rural), Fees
on Cash Deposits and Withdrawals above limits, Outstation Cheque Collection
Fees, RTGS Fees (Branch), RTGS Fees (Online), NEFT Fees (Branch), NEFT Fees
Transaction
(Online), IMPS Fees, Speed Clearing Fees, Axis/Non-Axis ATM: Cash Withdrawal
fees
(Financial transaction) fees beyond limits, Axis/Non-Axis ATM: Balance Enquiry
(Non-Financial transaction) fees beyond limits, International Cash Withdrawal
fees (ATM), International Balance Enquiry fees (ATM), Surcharge on Railway
Tickets purchased with Debit Card, Surcharge at Petrol Pumps, Cross Currency
Mark-up on International Debit Card Transactions
Outward Cheque Return, Inward Cheque Return, Outstation Cheque Return, ECS
Transaction
Debit Failure, Standing Instruction Failure Charges on Loan EMIs and Credit Card
failure fees
Dues
Card Replacement Fee, Additional MyDesign Card - Replacement Fee, Additional
CHIP & PIN enabled card - Replacement Fee, Additional Chequebook Fee,
Convenienc Duplicate PIN (Branch mode only), Duplicate Passbook, Physical Statement Fee at
e fee branch, for prior quarters, Stop Payment Instructions, Stop Payment Instructions:
ECS, DD/PO Cancellation, DD/PO Duplicate, DD/PO Revalidation, Additional
DD/PO Fee, Value Added SMS Alerts, Address Confirmation, Photo Attestation,
Signature Verification, Balance Certificate, Locker fees, NetSecure with 1 Touch

Group 4: Axis Bank Page 23

 Replacement fee
Other fee Demat A/C annual charges where applicable (If Demat account is linked with your
and savings account- Rs.650, If Demat account is not linked with your savings
charges account- Rs.2500), Other Free Services & Discounts
Foreign Currency Outward Remit by Wire/TT/Swift, Foreign Currency Outward
Remit by DD, Foreign Currency Inward Remit Fee per remittance, Foreign
Foreign Currency Inward Remit: FIRC Charges, Foreign Currency deposit at Branches,
currency Traveller Cheques & Currency Notes, Foreign Currency Cheque: Base Charges
fee 0.25% of INR Value + Service Tax, Foreign Currency Cheque: IRM
Commission, Foreign Currency Cheque: Courier Charges, Foreign Currency
Cheque: Additional Charge -FCS only, Correspondent bank Charges, Foreign
Currency Cheque: Additional, Drawee Bank Charges.

Exhibit 4: Interest rates charged by various banks

Banks Savings Account Car Loan Home Loan

RATE OF RATE OF INTEREST RATE OF RATE OF

INTEREST INTEREST INTEREST

FOR < 1 LAKH FOR > 1 LAKH

Axis Bank 4% 4% 9.85% - 12% 9.40% - 11.75%

ICICI 4% 4% 9.5% - 10.75% 9.45% - 9.70%

HDFC 4% 4% 9.45% - 11.25% 9.55% - 9.60%

Kotak 5.5% 6% 11.5% - 13.5% 9.40%

Group 4: Axis Bank Page 24

Exhibit 5: Billboards

Exhibit 6: Cards and offers

Exhibit 7: Number of downloads of banks apps vis-a-vis its rating on Playstore.

No. of Ratings on play

Bank Mobile app name downloads store
Axis bank Axis Mobile 100878 4
ICICI mobile banking-
ICICI bank iMobile 157508 4.1
HDFC bank HDFC Bank MobileBanking 125335 4.3

Group 4: Axis Bank Page 25

 Kotak Mahindra
bank Kotak Bank 71653 4.4

No. of downloads

71653
100878 Axis bank
ICICI bank

125335 HDFC bank

157508 Kotak Mahindra bank

Exhibit 8: Financial Analysis with competitors

Sr. Head Axis Bank HDFC Bank ICICI Bank Kotak Bank
No.
*1 Deposits 358 546 421 138
*2 Advances 339 465 435 118
*4 Revenues 50 71 68 23
*5 Net Profit 8 12 10 2
6 Earnings Per Share 34.6 48.8 16.65 11.42
7 Employees 50135 87555 72175 31410
8 BASEL- III NORMS-Tier- 1 12.51% 13.2% 13.09% 16.34%
Capital Adequacy Ratio/
Advances
9 Profit per Employee 17.83 Lakh 15 Lakh 14 Lakh 6.65 Lakh
10 Business per Employee 14.84 Crore 11.39 Crore 9.43 Crore 8.19 Crore
11 Gross NPA 1.67% 0.94 5.36% 2%
12 Net NPA 0.70% 0.28 2.67% 1%
*13 Non-Interest Income 9 28 15 1.35
19 Branches + ATMs 2904+9 4520 4450 1333
(internation
al)
20 Market Capitalization Rs. 105833 Rs. Rs. Rs.
317763.24 144540.52 142658.47
CASA Ratio 40% 43.2% 43.7% 31%
*-In Thousand Crore Rupees.

(Source: moneycontrol.com)

Group 4: Axis Bank Page 26

Exhibit 9: Market Capitalization of Axis Bank compared with other bank

Market Capitalization

KOTAK 142658.47

ICICI 144540.52

HDFC 317763.24

AXIS 105833

0 50000 100000 150000 200000 250000 300000 350000

(Source:Moneycontrol.com)

Exhibit 10: Number of complaints of each bank

ICICI HDFC Kotak Axis Bank

bank Bank
No. of complaints pending at the beginning of 2887 1901 91 7697
FY 2015-16
No. of complaints received during the FY 191453 165369 2763 231466
2015-16
No. of complaints redressed during the FY 190940 165400 2801 229650
No. of complaints pending at the end of the 3400 1870 53 9513
FY

Exhibit 11: NPAs of the bank

Group 4: Axis Bank Page 27

Exhibit 12: Article on rising NPAs of the bank

(Source: Economic Times dated 24th Aug, 2016)

Exhibit 13: Graphical representation of consumer survey

No. of cards held

50%

40%
39.40%
30%
30.30%
20% 27.30%

10%
4%
0%
0 1 2 3 or more

% share

a. Number of cards held by consumer

Preferred bank for opening new account

35.00% 31.80% 30.30% 31.80%
30.00%
25.00%
20.00%
15.00%
10.00% 6.10%
5.00%
0.00%
Axis HDFC ICICI Other

Group 4: Axis Bank Page 28

 b. Bank customers prefer to open an account

Simplicity in Banking
50.00% 42.30%
40.00%
28.80%
30.00%
18.20%
20.00%
10.60%
10.00%
0.00%
Axis HDFC ICICI Other Banks

c. Bank customers think have less complexity in terms of procedures

Preferred Bank for Credit Card

35.00% 31.80% 31.80%
30.00%
25.00% 22.70%
20.00%
13.60%
15.00%
10.00%
5.00%
0.00%
Axis HDFC ICICI Other

d. Customers preference while choosing credit cards.

Exhibit 14: FinTech and Banks:

Group 4: Axis Bank Page 29

Exhibit 15: Blockchain in Financial Services:

Exhibit 16: Online positioning of products of Axis Bank vis--vis its competitors:

Group 4: Axis Bank Page 30

Exhibit 17: Positioning of Axis bank vis--vis its competitors:

Exhibit 18: Interview excerpts of Rashi Arora, Area Manager, Mumbai:

Q 1) What is Axis Banks segmentation criteria?

We basically target high net worth clients. A dedicated relationship manager is appointed
for each HNI and the RM understands the lifestyle of his client and suggest products
accordingly.

However we also have dedicated teams working on the retail banking sector. We are trying
to cater to everyones needs. We have also implemented government schemes like Pradhan
mantra jandhanyojana etc. We are trying to target low income groups by understanding
their needs. We have variety of products, for example insurance, targeting audience of
different income group.

Q2) What is the overall strategy employed by the bank? How do you build customer
relationships?

We are trying to create a one stop shop for our customers. We want that all the needs of
our customers are satisfied by the bank itself so that we get major share of their wallet and
they do not go to our competitors. Our aim is to offer large product basket gives us the
liberty to generate and maintain new customers. You will find customers buying loans, FDs,
Mutual funds etc.

We try to maintain personal touch in the services we provide. There have been instances
where the staff has gone out of the way reduce customer grievances. We have also done
our bit in helping customers in need, for example, in case of floods our employees have

Group 4: Axis Bank Page 31

tried reaching out to a client who was stuck in an adverse condition. This simply shows that
we dont only mean business, we are here to build a trusting relationships with our clients.

We also help customers with their document fillings when there is some issue. I personally
being a Manager, when told by a grieved customer about how his account has not been
opened made sure that all the documents are in place and his account is opened as soon as
possible. Good services help us in retaining customers.

Other than this we have a good rewards program where all the basic concessions etc. are
given.

Q3) What is the value proposition of Axis bank?

Trying to cater to the needs of customers in each sector. Our private banking sector is one
of the best but equal efforts are made to improve the products of general category.

Q4) How do you acquire new customers?

It is primarily done by asking for references from existing clients. We also target offices. We
target one corporate office and call the potential customers there. Complex calling is
another method used. If there are multiple offices in a particular complex we try contacting
these offices so that a better, targeted and bigger client group is approached.

Simply getting a database from mobile companies and calling people up is not our cup of tea
as there is very low conversion rate from the same.

Q5) Any inputs on the competitors?

We are the third largest private bank, however it is not a position which will stay until we
constantly innovate. There are competitors like Kotak bank right behind us working hard to
catch up so we cannot relax at any point of time.

Q7) Any other issue that the bank is facing?

We had many issues and had lost potential clients due to faulty technical support but the
management has worked on it and a new system has been put in place which has made the
transactions easy and fast.

Q8) What is the branding and media strategy of the bank?

We had signed Deepika Padukone when she had given 5 back to back hits. She was at the
peak of her career and her face was everywhere. We could not think of a better brand
ambassador for our campaign and it has been a huge hit.

Q9) It has been 20 years since you have been working in this bank, tell us about the work
life balance that you had to maintain.

Group 4: Axis Bank Page 32

In the early years, yes we had to work hard to achieve the given targets and that required
putting in extra hours but since day one employees here are treated as family. Employees
are given positive reinforcements. The staff is even aware about the family members of
their colleagues and are there to help in case of any crisis. We are able to relate with the top
management as there is emotional touch on their part and they put in efforts to make the
entire system work like a united family.

Group 4: Axis Bank Page 33

 Reference

Bloomberg Quint. 2016. Axis Banks First Quarter Profit Plunges 21%; Asset Quality
Worsens -Bloomberg Quint. [ONLINE] Available at:19
http://www.bloombergquint.com/business/2016/07/22/axis-bank-first-quarter-profit-pl
unges-21-asset-quality-worsens. [Accessed 23 August 2016].
Savings Account: Compare & Open Savings Account Online. 2016. Savings Account:
Compare & Open Savings Account Online. [ONLINE] Available at:
https://www.bankbazaar.com/savings-account.html. [Accessed 23 August 2016].
Business Line. 2016. Banks brace themselves for new competition | Business Line.
[ONLINE] Available at:
http://www.thehindubusinessline.com/money-and-banking/banks-brace-themselves-for
-new-competition/article7781056.ece. [Accessed 24 August 2016].
The Economic Times. 2016. HDFC Bank plans to open 500 branches this fiscal - The
Economic Times. [ONLINE] Available at:
http://economictimes.indiatimes.com/industry/banking/finance/banking/hdfc-bank-pla
ns-to-open-500-branches-this-fiscal/articleshow/52386086.cms. [Accessed 24 August
2016].20
Nupur Anand. 2016. Axis Bank plans to increase headcount by 10% in FY17 | Business
Standard News. [ONLINE] Available at:
http://www.business-standard.com/article/finance/axis-bank-plans-to-increase-headco
unt-by-10-in-fy17-116022400851_1.html. [Accessed 24 August 2016].
Capgemini India. 2017. World FinTech Report.
Capgemini India. 2016. Capgemini Financial Services Analysis.
Reserve Bank of India. [ONLINE] Available at: https://www.rbi.org.in [Accessed 6 August
2017].
Axis Bank. [ONLINE] Available at: https://www.axisbank.com/ [Accessed 6 August 2017].

Group 4: Axis Bank Page 34