Axis Bank said to weigh majority stake sale of $1 billion shadow bank unit

India’s Axis Bank Ltd. is considering options for Axis Finance Ltd., including the possible sale of a majority stake in the shadow-bank unit, according to people familiar with the development.The private sector lender is working with an adviser on a strategic review for Axis Finance, the people said, asking not to be identified discussing private information. The bank may seek a valuation of $900 million to $1 billion in a potential transaction, the people said.

Deliberations are ongoing and Axis Bank could decide not to proceed with a sale, the people said.

A representative for Axis Bank didn’t reply to a request seeking comment.Shadow banks typically target customers who have limited or no access to traditional banking services because of their low income or lack of credit history. The lenders put higher interest rates on loans, which can make them more vulnerable to defaults and a stress point for the wider financial system.

Equity infusions from Axis Bank have supported Axis Finance’s growth, Fitch’s India Ratings & Research said in a report in January, noting the most recent was ₹300 crore in fiscal year 2024. Axis Bank also provides ₹2,050 crore in backup funding lines and operational oversight, India Ratings said.

Axis Finance is a wholly owned subsidiary of Axis Bank, providing services such as corporate and collateral loans and real estate financing, its website shows.