Axis Bank commits Rs 30,000 crore towards sustainable lending till FY26

Axis Bank, India’s third largest private sector bank, has committed Rs 30,000 crore under the sustainable financing framework lending till FY 2025-26, PTI reported on Wednesday. The bank’s commitments are in-line with the Sustainable Development Goals (SDGs), supporting the country’s goals under the Paris agreement. The incremental lending will will be covered under wholesale banking for the next five years.

Investors use the Environmental, Social and Governance (ESG) as a tool to assess how good the practices of a company are. The bank said that words like sustainability and ESG have raised awareness among the public about the idea of a sustainable planet, the bank said. It also added that, Covid and the related problems has magnified the issue of sustainability in a big way.

It added that the bank will assess these lendings in the next five years till 2025-26 to see positive social and environmental outcomes and increase it further. These are the metrics which have been spoken about for the last 3-4 years, it said.

ESG risk coverage to be expanded in credit appraisal

The bank will also be increasing its portfolio of green lending. It said that the existing wholesale banking portfolio will be towards SFF, including green and social sectors and would lend to companies where there are green practices.

In the future, the lender will also scale down its lending operations towards carbon-intensive sectors in its wholesale banking business portfolio.

It is also expanding its ESG risk coverage in credit appraisal under its ESG policy for lending, the lender said. It is building and deploying an ESG risk assessment toolkit, which includes ESG stress testing and ESG scenario for its large corporate, SME and agri-business verticals by 2022-23.

Borrowers will be incentivised by the lenders for adopting good practices by offering 0.5% interest waiver on new electric vehicle loans, effective immediately. By 2023-24, the bank will make 5% of its retail two-wheeler loan portfolio.

In that same time frame the bank has set a incremental disbursement target of Rs 10,000 crore under Asha Home Loans for affordable housing, and increasing share of women borrowers.

It also plans to 2 million (20 lakh) trees by 2026-27 across the country by creating a carbon sink among others.