Over Next 18 Months You Will See A Car From JSW: JSW Group's Sajjan Jindal | WEF 2025 | Davos

You're continuing to watch our coverage here from Davos 2025 and now to talk to us about what the outlook is like for the banking sector back home is Amitabh Chaudhry of Axis Bank. Amitabh, many thanks for joining us here on CNBC-TV18. Pleasure to have you. Before I talk to you about India, what are you picking up in terms of the big takeaways from the change of guard in the US and of course all the mega trends that will shape 2025?

Well, I mean obviously the US is a hot topic given all that is happening in the last 24 hours, so everyone seems to be talking about it. But over and above that, obviously some of the obvious things about AI… I heard you talking in the previous interview… and obviously people are talking about how AI could change the world. Climate risk is still very much a part of the agenda; all of us are suffering it and seeing the impact of that on a regular basis. Also, the headline for Davos this time is about collaborating in this intelligent age. I don't know, maybe it's intelligent people collaborating in this new age, but collaboration is becoming important because you're almost seeing a clear sign where unilateralism is what every nation is going for — it's every nation for themselves. So the collaboration needs to be more; people need to come together. We have a lot of conflict zones; we have a lot of global macros which are not necessarily talking about any form of collaboration whatsoever. And over and above that, with some of the things which Trump is talking about in terms of immigration and trade sanctions and whatever that might be, will have at least in the short term a pretty big impact globally. So, you know, lot of things to watch out for. And as I keep saying, we are in the risk business, so just looking at more risks out there.

Well, you know, let's talk about the micros and let's focus specifically on what's happening with your business in India. 15-quarter low for you both in terms of advances and deposits. What's hurting the business?

Well, you know, as I said, we're in the risk-taking business where RBI is very clearly giving an indication that we want you to manage a certain credit-deposit ratio. At Axis Bank, we've also been very focused on ensuring that we get the right customers and the right kind of deposits and do the right things for the long term. So yes, we could easily demonstrate a slightly better number, but we are slowing down consciously. The deposit growth in the third quarter of this year was 1.4 lakh crore; if we offered higher interest rates on the margin, we could show a bigger number, but that's not the right thing to do. Secondly, we don't focus on the quarter-end numbers; we focus on the average balances, and there our deposit growth was 13.3%. Our advances are linked to deposit growth, so the moment deposit growth comes down, advances will come down. We are seeing incremental risk on the retail side, so we have to be cautious. At the same time, we continue to invest in our platform so that when the growth comes back or when the risk settles down, we will be back. With the bank we have, we are very optimistic. We keep telling people that please don't look at us on a quarter-to-quarter basis. Banking is not about a quarter; it is about building long-term relationships, signing customers for the long term. So I think it will come back; I don't think we are worried about that. But yes, in the interim, if you have to manage the risk, it means you have to take some hard calls; we'll take those hard calls.

So, speaking of the hard calls, do you believe you've taken the hard calls or will you perhaps need to take more hard calls which will then reflect in the numbers in the near term?

Axis Bank believes we have one of the most aggressive provisioning norms in the industry. On the unsecured side, we provide for 100% within 90 days; that is not the norm followed by a lot of banks, including some bigger than us. So in that sense, whatever is happening in our portfolio, we are recognizing it and provisioning it away very quickly. So yes, as things stabilize and as the stock continues to get better, you will see the growth come back, you will see the elevated slippages come down. It's the next quarter or the quarter after that — only time will tell. But we are quite confident that with the book we write, the underwriting we do, the customers we have, it should not be a long-term phenomenon. However, we also have to be cognizant of the fact that if the regulator continues to keep a tight leash on lending in general, there is a possibility that some of the slippages you're seeing on the unsecured side could flow onto the secured side because they're all linked, and we have to be watchful of that. I don't think we should just be gung-ho for the sake of being gung-ho. We need to be watchful, and I think that's what we're trying to share with the market: we are not going to lose any opportunity to grow, but at the same time we have to be watchful of what risk could potentially emerge, and that's exactly what we're doing.

You know, you just talked about the transference of unsecured to secured on the slippages side. Slippages have also been at a 13-quarter high for you. So it's not a one or two quarter phenomenon. Do you anticipate things getting worse before they start improving?

No, I think it's already stabilized. If you look at our numbers, they're already stabilizing. We've gone through a period where the credit cost in India were at a historical low, and we talked about the fact that this will stabilize. So I think you're going through a cycle; a little bit of stability. We've also seen the Indian consumer over-leveraging themselves in some cases quite rapidly, so I think that is also getting normalized as we move forward. And obviously there have been some macroeconomic measures being taken by RBI in terms of controlling some of this unbridled growth. So all these factors have played a role. It's a high after a certain period of time, but we are still way below our long-term averages. We believe we'll be below our long-term averages and are quite confident about that because of our underwriting.

But what about private capex, Amitabh? What's the sense that you get on that front at this point in time? You said you're bullish about the India story, but in the near term, what does it look like?

Till now, it is basically the government that has been supporting the capex story. Private capex is still quite slow; I think it will take some time to come back. We are hopeful that private capex should pick up because you are seeing some sectors of the economy where investments are seriously taking off — real estate being one example. Manufacturing is seeing some investment, but it has been slow. And when you go and talk to the promoters, they are saying that they will be careful about where they invest; they're not going to do large investments for the sake of doing it. They need to be careful, watchful; they don't want to over-leverage. We have learned the lessons of the past. And by the way, we also need to realize that corporate profitability has gone up, so there's a lot of cash flow being generated by companies, and they're using that cash flow to invest rather than borrowing from the system. So private capex hopefully will pick up, but we've been talking about this story for at least the last 12 to 18 months, and we keep saying the same thing every quarter. But I think this time the tailwinds look slightly better. I think the government also realizes that they have kind of reached their capacity in terms of what they can invest, so if private capex does not pick up, it will start becoming a bit of a problem.

So if I were to ask you for a headline for Axis Bank in 2025, likely to be a better year in terms of numbers as well as reclaiming market share?

Well, our numbers will keep moving up. Even this year, in spite of the elevated credit costs, our profitability will be higher than last year. It's not that we are going down somewhere; we continue to move up. The pace of movement up is slightly slower. I think it should pick up in 2025-26, subject to these things stabilizing. We are aware of the fact that there is no liquidity in the system, deposit growth is slow, there are elevated levels of stresses, the rupee has depreciated. So there are some factors at play which could impact this growth going forward. Next year, I'm very hopeful that RBI is obviously looking at all these factors, and they've already started everyday auctions on VRR; they know they need to inject liquidity into the system. They know that credit growth has come to a point where it started hurting GDP growth to some extent. So I think they will take steps and they will hopefully look at measures which will revive some of this growth. If that comes through, then yes, 2025-26 should be better.

And on rates and the rupee, expecting a rate cut in February? And where do you believe the rupee is likely to be?

My view is: is a rate cut really going to spur economic growth? I'm not so sure. I think what the system needs more is liquidity back in the system, and secondly, deposit growth to pick up a little bit. We also need some of the macro regulations which RBI has brought in or is talking about bringing in — RBI needs to sit back and think through as to how they want to implement them and when. For example, if they implement the LCR draft guidelines as they exist, we're talking about 5 to 7 lakh crore being taken out of the system, which will have an impact. So my view on the rate cut is that they might do it to give a signal, but is it going to spur economic growth? I'm not so sure. As far as the rupee is concerned, obviously a lot of money has been spent to defend the rupee, but there is a kind of dollar play going on and I don't think it's going to end in a hurry. So just spending reserves to defend the rupee might not make sense; they already let go of it a little bit. My view is that the current dispensation is that the government will ensure that the depreciation does happen but in a controlled manner — rather than holding the floor, they'll allow a gradual depreciation. And that is what Raghuram Rajan had to say when he spoke to me this morning as well.

Amitabh Chaudhry, it's an absolute pleasure. Many thanks for joining us here on CNBC-TV18. We wish you the very best for 2025. We are going to take a break here; there's a lot more coming up. We'll be joined by Sajjan Jindal right after this. Don't go anywhere.

The conversations continue here at Davos 2025, and joining me now is Sajjan Jindal. Sir, thanks very much for joining us here on CNBC-TV18. Let me start by asking you about what you're picking up from the CEOs that you're talking to in terms of what the outlook for 2025 looks like. What's global demand likely to be?

Well, you know, just on the US, since President Trump has promised to make America great again for the second time around and once more make in America, you have a plant there in the US, so it might actually benefit you.

No, absolutely; there is uncertainty on how those tariffs are going to work out. Speaking of tariffs, the industry had asked the Indian government for protection by way of safeguard duties and anti-dumping duties. I believe that the work has started on the possibility of putting in safeguard duties. Have you heard back from the government?

But you know, at this point in time, because the outlook certainly seems to be that global growth will be stable, albeit uncertain, but stable at 3.3% — that's the IMF outlook — what's global demand for steel looking like?

Well, speaking of China, let's talk about your electric mobility plans. You showcased your car at Bharat Mobility a couple of days ago. The possibility of you tying up with a global partner, and possibly a Chinese partner at that, outside of the existing partnership with MG?