Axis Bank , one of India's leading private sector banks, has recently made significant adjustments to its non-performing asset (NPA) management policy following a review by the Reserve Bank of India (RBI). The central bank identified gaps in Axis Bank's approach, particularly in how the bank accounted for stress in vulnerable sectors.

Policy Revision and Financial Impact

The RBI's intervention led Axis Bank to modify its NPA policy during the June quarter, with all required corrections completed within that period. These policy changes have had a notable impact on the bank's financial performance:

• Gross Slippages: The revised policy resulted in gross slippages of Rs 8,200.00 crore.
• Net Profit Impact: The bank reported a net profit impact of Rs 614.00 crore due to these adjustments.
• Performance Metrics: Both the return on assets (ROA) and return on equity (ROE) of the bank declined as a result of these changes.

Financial Performance Overview

Despite the challenges posed by the policy revision, Axis Bank's recent financial results show resilience:

The bank's net profit for the quarter stood at Rs 6,279.50 crore, showing a slight decrease of 2.90% compared to the same period last year. However, the bank's revenue increased by 6.89% year-over-year to Rs 40,401.00 crore, indicating continued growth in its core business activities.

RBI's Ongoing Supervision

The Reserve Bank of India is expected to review Axis Bank's revised NPA policy during its annual supervisory checks in the July-September quarter. This review will be crucial in assessing the effectiveness of the bank's new approach to managing non-performing assets and ensuring compliance with regulatory standards.

Looking Ahead

As Axis Bank navigates through these policy changes, the focus will be on how quickly it can adapt to the new NPA management framework and improve its asset quality. The bank's ability to manage its NPAs effectively while maintaining growth will be key factors for investors and stakeholders to watch in the coming quarters.

The banking sector continues to face challenges in managing asset quality, and Axis Bank's proactive approach in addressing the RBI's concerns demonstrates its commitment to maintaining robust risk management practices. As the financial landscape evolves, such regulatory interventions and subsequent policy adjustments are likely to play a crucial role in shaping the health and stability of India's banking system.

Axis Bank , one of India's leading private sector banks, saw its stock price plummet 5.3% to ₹1,098.70 following the implementation of tighter asset classification and income recognition standards. The new norms, which have significantly impacted the bank's quarterly profitability, prevent account upgrades until full settlement is completed, a departure from previous rules that allowed upgrades after partial payments.

Impact on Financial Performance

The stricter standards have had a substantial effect on Axis Bank's financial metrics:

• Profit after tax reduced by ₹614.00 crore
• Return on Assets (ROA) declined by 15 basis points
• Return on Equity (ROE) dropped by 1.4 percentage points

Increase in Gross Slippages

The bank reported a sharp rise in gross slippages, which increased by over 70% to ₹8,200.00 crore. The breakdown of these slippages is as follows:

Market Reaction and Analyst Outlook

The news of Axis Bank's profit decline had a ripple effect on the broader market:

• Axis Bank's stock closed 5.3% lower at ₹1,098.70
• The Bank Nifty index experienced a 1% decline

Nuvama, a financial services firm, responded to the news by:

• Downgrading Axis Bank stock to 'Hold'
• Reducing the target price to ₹1,204.00 from ₹1,410.00

Analysts have expressed concerns about:

• Emerging asset quality issues
• Lack of aggressive growth guidance
• Potential margin compression
• Higher credit costs

Management Changes

In light of these developments, Axis Bank has announced several key management changes:

1. Neeraj Gambhir has been appointed as a Whole-time Director, designated as "Executive Director" for a period of 3 years, subject to regulatory and shareholder approvals.

2. Arjun Chowdhry, Group Executive for Affluent Banking, Cards, Payments and Retail Lending, has resigned to pursue entrepreneurial endeavors, effective August 31, 2025.

3. Anoop Manohar and Arnika Dixit have been categorized as Senior Management Personnel, effective August 4, 2025, and September 1, 2025, respectively.

Conclusion

As Axis Bank adapts to these new regulatory standards, investors and analysts will be closely monitoring the bank's performance in the coming quarters. The focus will be on assessing its ability to manage asset quality and maintain growth in a more stringent operating environment.