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The Unusual Billionaires

Case Study: Axis Bank

The author has started the chapter by explaining to us about the banking business. He says that the banking biz is different from manufacturing as the raw material and finished product for a bank is the same, money! There is no value addition done by the bank unlike a manufacturing company. Therefore, in banking the people who run the bank are considered the most important. As Warren Buffet quotes, “Banking is a good business if you don’t do anything dumb”.


Axis Bank as we know it today, started as UTI bank promoted by the Unit Trust of India in the year 1994. Axis Bank remains a case of losing many battles but winning the war. Let’s see the journey of the bank through three phases.


Phase 1: 1994-99

The Indian banking sector opened to the private players post 1994 when RBI issued banking licenses to ten private sector banks. Four of these were backed by large financial institutions such as HDFC Bank, ICICI Bank, UTI Bank and IDBI Bank. Five were backed by individuals and corporate groups: Bank of Punjab, Centurion Bank, Global Trust Bank, IndusInd Bank and Times Bank. There was also one cooperative bank that got converted into a commercial bank, Development Credit Bank (DCB).


Amongst them, the UTI bank, although given the stature of a private bank, was backed by government owned UTI. For those who do not know the history of UTI, until 1963, UTI was the only mutual fund available to an Indian investor. This gave UTI bank (now Axis Bank) a huge competitive advantage.


The strategy was to use UTI’s 35 million customer base to pitch the bank’s products. The dependence of the bank on UTI was immense. The bank was not even required to open branches and had just 7 branches in the first year of operation. It could operate directly from the 41 UTI offices over its first 5 years. The other advantage was tapping corporate clients of UTI to pitch the banking products.


The initial phase of the bank was led by a State Bank of India veteran, Supriya Gupta. Supriya had a good reputation amongst the banking community and was a member of the prestigious Bengal Club of Bankers. He was adamant in acquiring bank staff on personal relations rather than top IIT, IIM graduates. This although was not seen with much appreciation, however, some of his recruits were quite instrumental in the development of the bank. When recruiting on personal relation also meant that salary was not the deciding point of recruitment, but relations. 


Like other startups, the culture at Axis bank, (then UTI bank) was very vibrant. However, the bank was not managed in the most ideal way possible and hence by the year 2000, the bank’s Non-Performing Assets (NPA) were the highest among the private sector banks. Till now, the bank was also not very successful in building the liabilities, which in the bank’s case are the deposit base. 


Phase 2: 2000-09

The author has made a very important revelation here. He has told us that banking is a commodity business. Hence a bank needs to be a low-cost producer, i.e., a low-cost lender in order to thrive. In the present world, being low cost is possible only when a bank has low-cost liabilities called Current Account and Savings Account, called CASA in banking terminology.


This was well understood by the second lead at Axis Bank (UTI Bank then), P. Jayendra Nayak. Axis Bank as we know it today has been a baby child of the vision of Nayak. Ironically, he was a banker with no banking experience. He was a civil servant at the Ministry of Finance. He was the one who fought with the board of directors for getting the employee’s salary at par with the other private sector banks of similar size like HDFC and ICICI. ESOPs were also introduced during his early years.


Now, with making the employees happy, the next obvious step was to make customers happy. Hence, Nayak took the decision of being aggressive on branch and ATM expansion. This was possible as Nayak had convinced the board to get foreign capital of INR 157.5 crores from Actis Capital and South Asia Regional Fund. Axis Bank CASA thereby improved during this phase from 15% in FY01 to 44% in FY09, which compared well with others like HDFC Bank and ICICI Bank.


In 2007, With good capital, lower NPAs, high CASA, the bank was well positioned in itself and now was the time to leave the UTI image and build a new brand. Hence the bank was renamed “Axis Bank”.


Although Nayak's tenure was an immense success for the bank, the end was downhearted for him. Due to his unhealthy relationship with the board, the board had not allowed him to choose his successor and had instead bought Shikha Sharma from ICICI Prudential.


Phase 3: 2009-Present

Shikha, although not chosen by Nayak, had a very successful tenure. An IIM-A alumnus, started her career with ICICI Bank, spent three decades establishing the stock broking business at ICICI and lastly headed ICICI Prudential Life Insurance as the MD and CEO. Although she was not welcomed at Axis Bank due to Nayak’s denial and being from a competitor bank, she found her way out. As one of her first decisions, she decided to create four strategic units for the bank.


  1. Retail, SME and agriculture banking
  2. Corporate Banking
  3. Non-Banking Retail
  4. Corporate Center​

She also hired a lot of new talent. Out of those, one out of box hiring was Mansha Lath Gupta from Colgate Palmolive. She was recruited as the Chief Marketing Officer to lead the bank's brand and communication strategy.


One controversial decision was acquisition of Enam Securities in the year 2010 for INR 2,000 crore. This made Axis compete with ICICI Bank on the investment banking and stock broking front.


In less than two years, Sharma changed Axis Bank’s team and operational structure, and completed a substantial acquisition. Her next move was to organize the loan book towards retail and reduce the concentration on corporate lending. Her approach towards retail built upon Nayak’s work. While Nayak successfully set up a large branch network and a proportionately large customer base, she used the same base to extend more retail loans and retail term deposits. Every customer who walks into a bank branch to open a savings account is also a potential client for a term deposit, credit card, personal loan and vehicle loan. A lot of data driven analytics was also used to drive retail lending in the bank.


Other notable offerings in her tenure were private banking for affluent customers, international banking, etc. all of which led to significant fee income generation for the bank.


IBAS Framework:



The bank innovated the product profile catering to different segments of the society. The bank was also very aggressive in expanding the branch and ATMs across the country since Nayak took over. Another great move was to provide INR 2,00,000 of accidental insurance to a salary account holder hence relieving the employer of providing insurance separately.



The bank in its initial days had leveraged the brand image of UTI. However, since UTI was bailed out by the government for alleged security fraud and losing market share to the competitors it was strategically prudent to change the brand name to Axis Bank.
Shikha Sharma was also keen to make the bank a brand among the youth. Hence, she took the decision to get Deepika Padukone as the brand ambassador for the bank.



The board of directors at Axis Bank were independent as shown during Nayak's fiasco when he was not allowed to keep his intended successor. The bank was also very employee friendly and the culture helped in retaining talent. This is evident from many employees having a four-digit employee code that were issued when the bank had less than 10,000 employees. The ESOPs and aligning the employee’s salary to that of competition during Nayak’s era also showcases employee friendly attitude of the bank.


Strategic Asset

The branch, ATM and base of deposit holders, form the strategic assets for the bank.

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