Shikha Sharma cuts short her tenure at Axis

Board accepts her request to curtail her tenure after reports of RBI’s displeasure; to quit by Dec. 31

The board of private sector lender Axis Bank has decided to end the term of its chief executive officer Shikha Sharma by the end of this year amid mounting concerns over deterioration in the bank’s asset quality.

“Kindly note that Shikha Sharma, Managing Director and CEO of the bank has requested the Board to reconsider the period of her re- appointment as the Managing Director & CEO of the Bank be revised from 1st June 2018 up to 31st December 2018,” the bank said in a statement to exchanges.

The bank’s board has accepted her request, subject to the approval of the RBI, the statement added.

Earlier, the board had extended the tenure of Ms Sharma for the fourth time, which would have ended in 2021. However, the bank’s proposal got into rough weather after the RBI had reportedly its displeasure and asked the bank’s board to reconsider the decision to reappoint her as the MD and CEO.

While the exact reason for the RBI’s displeasure is not known, the central bank is believed to be unhappy with Ms Sharma owing to the surge in bad loans and systemic lapses at one of the leading private banks in the country.

Ms Sharma, who traces her roots to ICICI Bank, took over as the chief executive of the bank in June 2009. A contemporary — and also popularly billed as a challenger — of Chanda Kochhar in ICICI Bank, Ms Sharma was the CEO of ICICI Prudential Life Insurance before joining Axis Bank. It is widely believed that she quit the ICICI Group in 2009 after Ms Kochhar was appointed as ICICI Bank’s CEO.

Her nearly 40- year- long successful career in the banking sector has been eclipsed by a spurt in bad loans.

While Axis Bank saw strong growth in advances under her tenure, its asset quality deteriorated over the years. Its advances increased from ` 81,557 crore as at the end of March 2009 to ` 3.7 lakh crore as of March 2017. However, its gross nonperforming loans ( GNPL) soared from ` 1,173 crore as at the end of December 2009 to ` 25,001 crore by the end of December 2017.

Things turned worse after the Reserve Bank of India ( RBI) announced its asset quality review in December 2015 following which the bank reported a fourfold increase in NPA’s over a span of just one year. Its NPAs jumped from ` 5,724 crore at the end of December 2015 to ` 20,466 crore by the end of December 2016.

Over the last two years, the bank came under greater scrutiny of the RBI for providing incorrect details on distressed assets. After conducting its annual risk based supervision, RBI said that the bank underreported bad assets worth ` 9,480 crore in FY16 and ` 5,633 crore in FY17.