Axis Bank CEO warns of tighter liquidity and rising risks for Indian lenders

At the BFSI Insight Summit 2026, Axis Bank managing director and CEO Amitabh Chaudhry highlighted a shift toward tighter liquidity in India’s banking sector, with the RBI absorbing excess funds and raising incremental deposit rates. He cautioned that rising deposit costs and anticipated interest-rate hikes, compounded by inflation and West Asian geopolitical uncertainty, could pressure banks’ earnings and credit quality.

Chaudhry expects credit growth to moderate in the second half, though longer working-capital cycles and infrastructure financing will keep demand alive. He pointed to stronger capital buffers, higher provision coverage and new expected credit loss norms as factors improving resilience compared with the previous high-growth cycle. Finally, he stressed the need for selective capital deployment, talent development and careful navigation of emerging regulatory changes such as the IRDAI insurance distribution proposal.