Axis Bank informed the stock exchanges in a regulatory filing on Wednesday that it will infuse ₹1,500 crore into its wholly owned subsidiary, Axis Finance.
According to the statement, the Axis Bank board has approved the capital infusion into the non-banking financial company (NBFC) in one or more tranches by March 31, 2027, through subscription to its rights issue.
The investment has been approved by the banking regulator, the Reserve Bank of India (RBI), via a letter dated March 10.
The transaction falls within the scope of related-party transactions following the RBI’s revised guidelines, which allow multiple entities within a banking group to undertake the same line of business, subject to board approval and adequate rationale and justification.
Earlier, Axis Bank had been informed that it could not infuse additional capital into Axis Finance to fund its growth, following the RBI’s October 2024 ‘forms of business’ circular. The circular had stipulated that only a single entity within a banking group could undertake a particular form of permissible business.
Consequently, Axis Bank decided to bring in an investor by diluting a portion of its stake in Axis Finance to raise capital for expansion, and even appointed Morgan Stanley to identify potential investors.
However, after the RBI revised its guidelines and removed the clause that had barred banks and their subsidiary NBFCs from operating in the same line of business, Axis Bank regained the option to infuse capital into its NBFC subsidiary.
Accordingly, Axis Bank approached the RBI with a proposal to infuse capital into its wholly owned subsidiary, Axis Finance, which was subsequently approved by the banking sector regulator.