Cost of funds could go up by 10 bps next quarter: Axis Bank

Bank to focus on home loans and loan against property within retail segment

Cost of funds could go up by 10 basis points in the next quarter and it is inevitable that some of the higher cost or part all of it is passed onto the borrower, said Rajiv Anand, President, Retail Banking, Axis Bank. But this may not may much impact on volumes, he added.

Speaking on the sidelines of a press conference to launch the bank's new mobile app, Anand said, there is still good demand for retail credit. In liabilities, money is coming into Fixed Deposits, since the interest rates are attractive now.

The bank plans to increase the share of retail credit to around 35-40% within the next two years, from the current share of 30-35%. Within the retail book, home loans account for about 60%, loan against property – 10%, credit cards-5% and segments like gold loans, personal loans and commercial vehicles make up the rest.

There could be some stress in the commercial vehicle and gold loan portfolio and the credit quality could see slight depreciation, Anand said. So, the bank will focus on home loans and loans against property.

Axis Bank launched the Mobile Banking App 2.0 for its customers. The app has been launched in partnership with Tagit, a leading Singapore mobile solutions company. The app comes in three versions, depending on the kind of account, such as Youth, Prime and Premuim. 10% of the bank's customers use mobile banking, Anand said.

Using the app customers can do fund transfers, pay bills, check account statements, request for cheque books or other services and so on. The limit for fund transfer is Rs 1lakh per day and will be soon raised to Rs 2 lakh per day.

Of the total transactions, 50% happen through ATMs, 25% through internet and mobile, 10-15% through Point-of-Sales and the rest through branches. With regard to cost to the bank, a branch transaction is 10 times more expensive than a mobile transaction.