Axis Bank shares slip 2% after Q1 profit hit linked to RBI-driven bad loan spike

Economic Times

2 days ago

Axis Bank shares declined 2.4% to hit the day's low of Rs 1,072.60 on the BSE in Monday's trade after the bank reported a weaker-than-expected Q1FY26 performance, impacted by a sharp increase in provisions for bad loans, as a result of an intervention by the Reserve Bank of India (RBI).
ADVERTISEMENT The lender's net profit for the June 2025 quarter fell 4% year-on-year to Rs 5,806 crore, missing market estimates.
According to CNBC-TV18, regulatory intervention by the RBI played a role in the bank's unexpected rise in bad loan provisions. RBI's supervisory review reportedly required Axis Bank to revisit its asset classification and stress recognition practices, especially within its unsecured retail and small business loan books.
Sources cited by CNBC-TV18 revealed that the RBI had flagged Axis Bank's internal policies as overly lenient in identifying stressed loans, leading to under-recognition or delayed recognition of non-performing assets (NPAs).While Axis Bank was technically compliant with regulatory guidelines on income recognition and provisioning, its internal framework was seen as too permissive, prompting the RBI to instruct corrective action last quarter.The result of this course correction became visible in Q1FY26 as provisions spiked, weighing on profitability. The bank had attributed Rs 614 crore of the hit on its bottom line to a 'technical impact' in its results for the quarter ended June 2025.
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On paper, Axis Bank followed regulatory norms for NPA recognition, but CNBC-TV18 reported that its internal policies lacked qualitative rigour. While complying with regulatory standards quantitatively, the bank's practices reportedly did not align with the intended spirit of the regulations.
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