RBI debars Axis Bank from importing bullion

The Reserve Bank of India has dropped Axis Bank from the list of lenders allowed to ship in gold and silver for the current fiscal year. The action comes a day after reports said the central bank asked the board of the lender to relook the three-year fourth term offered to Shikha Sharma as managing director and chief executive, citing a massive spike in bad loans.

The Reserve Bank of India (RBI) has dropped Axis Bank from a list of banks it has cleared to import gold and silver in the current financial year that began on April 1, in the latest setback for the country’s third-biggest private sector lender.

It was unclear why Axis, a leading gold importer, was not on the list released on Monday.

A spokesman for the RBI did not have an immediate comment. An Axis Bank spokesman declined to comment.

The removal from the import list is a new blow for Axis, which has faced increased regulatory scrutiny in the past few months because of bad loans.

The move could help other leading bullion importer banks, including YES Bank, HDFC Bank and Bank of Nova Scotia gain market share, said three bullion dealers at other Indian banks who asked to remain unidentified because of the sensitivity of the matter.

The RBI will allow 16 banks to import bullion during the 2018-19 financial year, according to the list. Two other small private sector lenders — Karur Vysya Bank and South Indian Bank — that were on the list last financial year did not make the latest one.

Karur Vysya has not imported gold for the past three financial years, said a senior bank official who asked not to be identified. A spokesman for South Indian Bank also said the bank had not imported gold since 2014.

The latest woes add to Axis Bank’s ongoing problems including extra bad loans unearthed after an RBI audit for which it had to pay a fine.

It is also among companies that were ordered by the markets regulator Securities and Exchange Board of India (Sebi) to conduct an internal probe into the suspected leak of financial information related to its results after a Reuters investigation.

Shares in Axis Bank ended up 0.5 per cent after falling 1 per cent in early trade in a Mumbai market that rose 0.33 per cent.