Axis bank hopes to achieve a higher market share through retail advances — 30 % of total advances, up from 21 % now, by penetrating smaller towns over the next three years. The bank’s retail advances today stand at Rs 29,328 crore.

The bank will also launch loan processing centres across smaller towns to capture latent demand.

Jairam Sridharan, senior vice-president, head of consumer lending and payments, Axis Bank, said in a press conference that mortgage markets in eight major metros are almost saturated. “Our new growth will come from smaller towns and cities. We will grow the portfolio conservatively and build up the business steadily with a focus on secured lending products like mortgages and new car loans,” he said.

The bank’s loans and advances registered a growth of 27 % year-on-year to reach Rs 140,089 crore at the end of the second quarter ended September 30, 2011. Large and mid-corporate loans together accounted for 57 % of the total loan book. SME loans accounted for 15 % of the net advances and agriculture accounted for 7 %, while retail made up for 21 % of the total loan portfolio.

The current growth in corporate banking is likely to come from working capital and planned disbursements for outstanding sanctions in the infrastructure space.

Sridharan said the growth in the retail book will have to come under tough macro-economic conditions like high inflation that eats into the purchasing power of consumers, slowdown in real estate, fall in stock markets, slowdown in car sales and regulatory measures like deregulation of the savings rate, and waiver of pre-payment penalty for home loans.

The bank focuses on secured products within retail. Axis bank home loan accounted for 76 % of the total portfolio and Axis bank car loan were 13 % of the retail loans portfolio. This trend is expected to grow in its next phase of growth as well.

“After a few years of slump in business, the axis bank credit card category is starting to grow. Although, we offer credit cards only to in-house customers, we hope to have about 8 lakh cards in circulation by March 2012. We will also be actively looking at partnerships for the business. Our recent tie-up with LIC for expanding our card base is an example,” added Sridharan.

The bank had 6.82 lakh cards in circulation at the end of the second quarter ended September 30, 2011, with a book size of Rs 550 crore, with spends on cards increasing to Rs 7,500 a month from Rs 6,500 about 15 months ago. The bank has about 1.4 crore debit cards.

The bank on Tuesday launched the Insta PIN, India’s first PIN generation system that allows customers to receive the ATM PIN on their mobile phones through the bank’s IVR system.

During the second quarter, the bank set up 723 new ATMs taking the total network size to 7,594 ATMs. The total branch size of the bank is 1,438 branches of which 390 branches are in metros and 457 branches are in urban centres. The remaining branches are distributed in semi-urban and rural areas.