Axis Bank is halting sales of its shares in the consumer lending sector, sources said

Axis Bank has shelved plans to sell a stake in its consumer finance arm, Axis Finance. after the central bank relaxed proposed restrictions on overlapping business activities between banks and their subsidiaries, three sources familiar with the matter.

India’s third-largest lender last year started the process of selling shares in Axis Finance and appointed investment bankers after the Reserve Bank of India proposed draft rules in 2024 that would bar banks from having overlapping businesses with subsidiaries.

Morgan Stanley was appointed banker on the deal.

Following a backlash from the industry, the RBI watered down its proposal in December 2025, allowing banks to continue with potentially overlapping non-banking activities while shielding them from banks’ core activities.

The rules in their original form could have forced major banks, including HDFC Bank, ICICI Bank and Axis Bank, to merge or divest non-bank lending businesses held as subsidiaries.

The change in rules has led to a rethink at Axis Bank, said the sources directly familiar with the deal.

“Axis Finance is well capitalized and does not need to rush to raise capital,” said one of the sources, who declined to be named.

An email sent to Axis Bank and Morgan Stanley was not answered.

Axis Finance, registered as a non-banking finance company, will submit a revised growth plan to the bank’s board in April and will then re-evaluate its capital raising needs, the person said.

A separate source did not confirm that the deal had been put on hold, but said the bank would approach the regulator with options for Axis Finance – including injecting new capital itself.

According to local media reports, the deal to sell an initial 20% stake in the lender was estimated to be worth $350 million to $400 million. Reuters could not independently confirm the value of the deal.

Its own private equity fund Kedaara Capital was the most active in the discussions, the second of the three sources said.

A third source said the bids received were not lucrative enough, prompting the bank to reverse the sale following the recent regulatory change.

According to the company’s website, Axis Bank has invested 23.75 billion Indian rupees ($262.49 million) in Axis Finance over the past decade. As of March 31, 2025, Axis Finance had assets under management of Rs 415.83 billion.

Published on January 23, 2026