Axis Bank Commits Rs 30k Cr till FY26 towards Sustainable Lending

India’s third-largest private sector lender Axis Bank has committed Rs 30,000 crore lending till FY26 under its sustainable financing framework, said the media reports.

These commitments are in line with the Sustainable Development Goals (SDGs), supporting India's commitments under the Paris Agreement, added the reports.

Commenting on the development, Rajesh Dahiya, Executive Director (Corporate Centre), Axis Bank told PTI, that “as part of its commitments, the bank has set a target of incremental lending of Rs 30,000 crore over the next 5 years, under wholesale banking towards pertinent sectors included in its Sustainable Financing Framework (SFF).”

Dahiya further said, Environmental, Social and Governance (ESG) is a measure which investors use as a tool to assess how good the practices of a company are. For the last 3-4 years, the words sustainability and ESG have made people sensitive about the whole idea of a sustainable planet.

"These are the metrics which have been spoken about for about 3-4 years now. However, with COVID and all its problems, it highlighted the issue of sustainability in a very big and magnified manner.

“In the next five years, we want to lend Rs 30,000 crore more incrementally as wholesale banking towards pertinent sectors including Axis Bank’s SFF. We want to increase our portfolio of green lending,” Dahiya said, reported PTI.

He said the bank’s existing wholesale banking portfolio towards SFF, including green and social sectors, is a little over Rs 29,000 crore and it intends to lend to companies where there are green practices.

After five years till 2025-26, the bank will assess these lendings to see positive social and environmental outcomes and increase them further, he added.

Going forward, the lender will also scale down its exposure to carbon-intensive sectors in its wholesale banking business portfolio.

The lender said it is expanding its ESG risk coverage in credit appraisal under its ESG policy for lending.

Axis Bank is building and deploying an ESG risk assessment toolkit, with ESG stress testing and ESG scenario analysis, for its large corporate, SME and agri-business verticals by 2022-23.

The lender will incentivise the borrowers for adopting good practices by offering a 0.5 per cent interest waiver on new electric vehicle loans, effective immediately.

“We will make 5 per cent of our retail two-wheeler loan portfolio as electric by 2023-24,” he said.

Dahiya said Axis Bank is probably the first among corporates to constitute an ESG Steering Committee comprising heads of key departments who shall act as ESG champions within and outside the bank.

The bank has announced its commitments ahead of the upcoming 2021 United Nations Climate Change Conference (COP26) at Glasgow, UK from October 31 - November 12.

The participants are expected to talk about enhancing their commitments made at COP21 in Paris in 2015.

In line with its ESG strategy, Axis Bank has recently raised India’s first sustainable USD AT1 bonds of USD 600 million in the overseas markets.