Mumbai, 23 January 2026 – Axis Bank, India’s third-largest lender, has paused plans to sell a minority stake in its consumer lending unit, Axis Finance, following a regulatory pivot by the Reserve Bank of India (RBI) that eased proposed restrictions on overlapping business activities between banks and their subsidiaries, three people familiar with the matter said.
Axis Bank initiated the process last year, appointing Morgan Stanley to advise on the deal, amid draft RBI rules that sought to bar banks from engaging in potentially overlapping businesses through non-bank lending arms. Those draft rules, if implemented in their original form, could have forced major lenders such as Axis Bank, HDFC Bank and ICICI Bank to divest or restructure profitable non-bank financial subsidiaries.
However, after industry pushback, the RBI revised its stance in December 2025, allowing banks to continue operating potentially overlapping non-bank businesses provided they are ring-fenced from core banking operations, a move that has prompted lenders to reassess strategic plans.
Rethinking Capital Strategy for Axis Finance
With the regulatory pressure eased, Axis Bank determined that Axis Finance, a non-bank finance company (NBFC), is sufficiently capitalised and does not need to rush into raising fresh capital through a sale of shares, one of the sources said.
Axis Finance, which manages a portfolio of consumer loans and retail credit products, was expected to fetch roughly 20% of its equity sold for about $350 million to $400 million in an earlier phase of discussions, according to local media reports.
The deal has now been put on hold, with Axis Finance slated to submit a revised growth and capital plan to the bank’s board in April 2026. The refreshed strategy may explore alternative capital options, including internal funding or regulatory engagement, depending on market conditions and future capital needs.
While private equity interest, including from firms like Kedaara Capital, was previously strong, sources said that bids received were not compelling enough once the regulatory environment changed, further reducing the immediacy of a sale.
Broader Banking Sector Implications
The RBI’s recalibrated approach, allowing banks to maintain NBFC subsidiaries under appropriate structural safeguards, reflects the central bank’s shift toward supporting diversified financial ecosystems while safeguarding core banking stability. Analysts say the revised policy strikes a balance between risk containment and operational flexibility, enabling lenders to harness the growth potential of consumer finance without severing these businesses prematurely.
For Axis Bank, the decision to pause the sale highlights a broader industry challenge: balancing capital needs with strategic objectives as regulatory frameworks evolve and financing markets remain dynamic. With the economic backdrop in India still supportive of retail and credit growth, retaining control over Axis Finance gives the bank more optionality as it navigates competitive pressures from peers in retail lending and digital financial services.
The next strategic chapter for Axis Finance will likely hinge on board deliberations and how rapidly consumer credit demand expands in India, a sector that has shown robust growth despite macroeconomic headwinds.
