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Business – Axis Bank’s new MD & CEO Shikha Sharma

George Cherian

Axis Bank’s new MD & CEO Shikha Sharma is quite clear that her bank is not going to get into the insurance space. She believes there’s just too Shikha Sharma, MD & CEO, Axis Bank
much untapped opportunity that the bank has in building out a top-quality full-service retail bank and believes that product innovation and service quality will have to go hand-in-hand if banks must improve customer satisfaction levels. In an interview with ET NOW, she outlines her plans for the bank. Excerpts:

You’ve been on board long enough to chalk out a vision for the bank. What will it be?

I came here with no preconceived notion. What I wanted to do and what I’ve focused on getting done in the past four months is to get a bare understanding of Axis Bank, its businesses, its people and its culture.

Thus, the intent is to take the core strengths of Axis Bank, marry them to the opportunities the economy provides and then see how we can create a sustainable, value-creating business, which in turn, creates value for customers, is a great place for employees and creates sustainable shareholder value.

Should one assume that your decision to stay out of life insurance is only because of the LIC of India?

One of the great things about Axis Bank is that it is truly a board-managed company and all shareholders, who are on the board, do participate with an intent to look at what is right for the bank. So, I haven’t seen any of the shareholders come in with their specific agenda and say that this is good for SUUTI or this is good for LIC or for somebody else so this is what we should do. Thus, LIC is not constraining us in terms of what to do.

Why should Axis try to build out a greenfield life insurance business at this point. I think a lot of players are thinking to exit that business now, so I don’t see the logic in entering into that, in terms of manufacturing. Will we be a key distributor of life insurance? Yes, we would like to be, if we want to be a great consumer bank then we want to leverage that retail liability franchise and see what products make sense to our customers. We would definitely be keen on a sustainable long-term partnership on life insurance distribution.

So, you do not intend getting into the manufacturing space in life insurance?

If we have to go out and invest in building an insurance business, whether it’s in life or general… Is that the best use of my capital or am I better off deploying that capital in the bank and maximising shareholders’ returns. But equally it’s that there are so many things we’re good at as a bank and there’s so much more that needs to be done that how is it that I can best deploy the talent base of the bank right now. Form that perspective, general insurance is also pretty crowded, volatile in terms of returns. We would love to continue to be a distributor. But a manufacturer? I don’t know if it makes sense.

So, life and general insurance… Axis is not getting into the manufacturing space.

No, we’re not looking at that.

How about the businesses that you are in — private equity, investment banking – what are your plans there?

As far as other businesses are concerned… I’d said we would like to be a great retail bank, a great SME bank, a great corporate bank with a special focus on infrastructure and we’d like to grow our payments franchise. Now within that, if we have to grow each of our consumer propositions, then you have to look at more products.

So, asset management is something that we would look at as tightly integrated with the bank’s strategy to see how we can service our retail and corporate customers better by providing them a wider suite of products, manufactured under the Axis brand. Any other business will also be looked at through the same lens… Axis has, in fact, been among the top two bond houses in the country for many years. We would want to continue that. That has been a part of the investment bank type services the bank has been providing, so we would look at other sets of products and services.

How about retail banking? Are you happy with the size of the business?

Axis Bank has a fantastic retail banking franchise, which reflects in the stable CASA deposits of the bank at around 40% for the past several years. The bank has been focused on ways of leveraging that retail liability franchise to provide more products and services to our customers. So, the bank, for instance, provide mortgages, we do auto loans, we’ve done personal loans . So, the focus would be on how do we become a full-service retail bank to our retail customers.

And as I said, the products could be manufactured by us or they could be sourced from other partners.


October 15, 2009 - Posted by | Uncategorized |

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