Sharma’s eventful 9 years at Axis Bank
Shikha Sharma was appointed MD & CEO of Axis Bank in June 2009 by P J Nayak, then chairman of the bank. Sharma was to fortify the retail lending practice of Axis Bank and she did that. She will be completing nine-and-a-half years with Axis Bank upon her retirement in December. Under her leadership, Axis became a true universal bank with an enviable investment banking team.
Shikha Sharma was appointed as the managing director and chief executive officer of Axis Bank in June 2009 by P J Nayak, the then chairman of the bank. Sharma’s appointment came at a time UTI Bank was named Axis Bank, and the board of directors felt that the bank should be more aggressive in pursuing business. The bank had a legacy issue and high exposure in corporate loans. Sharma’s job was to fortify the retail lending practice at Axis Bank and she did that.
Sharma was earlier with ICICI Bank for 29 years, and would be completing nine- and-a-half years at Axis Bank upon her retirement in December. Prior to this, she was the managing director and CEO of ICICI Prudential Life Insurance.
A contender for the top post at ICICI Bank, Shikha left when Chanda Kochhar became the head. But Sharma’s accession at Axis Bank was not an easy one. Axis Bank witnessed a flurry of senior management exits upon the appointment of an ‘outsider’ as CEO. Sharma almost completely changed the team and picked her own deputies.
Axis Bank became a true universal lender under Sharma, with an enviable investment banking team. Axis Bank regularly features at the top three of every league tables in debt and equity fundraising.
Sharma acquired Enam Securities with this specific aim in mind. While her strategy to acquire Enam’s investment banking business for ~20.67 billion and expand the bank’s retail base worked well, loans to infrastructure sector players resulted in high non-performing assets. When she joined, the gross non-performing asset (GNPA) of the bank was at 1.01 per cent of total advances. By December 2017, GNPA rose to 5.28 per cent.
A Reserve Bank of India (RBI) audit also found the bank to be hiding much of its bad debts. The divergence between what the bank reported and what the RBI auditors found was to the tune of ~48.67 billion in 2016-17 and ~94.78 billion in 2015-16. Due to the pressure of bad debts, net profit at the end of December was at ~7.26 billion against ~5.62 billion when she became the MD of the bank.
Between 2008-09 and 2016-17, Axis Bank’s net interest income and other incomes, mainly from fees, grew five-fold and four-fold, respectively.
In July 2017, Sharma was recommended for a three-year reappointment by the bank’s board, effective July 2018. Some analysts say the board’s decision was is haste. But, now the RBI has reportedly asked the board to reconsider the decision.
The apex bank could be upset with the wide divergence in asset quality reporting, but Axis Bank probably angered the RBI by violating ‘Know Your Customer’
norms during demonetisation and even before. Axis Bank, ICICI Bank and HDFC Bank were fined by the regulator in June 2013 for helping a bogus client to legitimise unaccounted money.
Sharma would be 60 in November 2018, and would have completed 10 years as Axis Bank’s CEO the following year in June.
Considering Sharma was a lateral entry, hired from ICICI Bank, and not grown organically in the bank such as Aditya Puri in HDFC Bank, the RBI might want to ensure the bank has other options as well.