Why Axis Bank's Shikha Sharma will quit in December: 10 points
April 15, 2018
In a surprising turn of events, the Axis Bank on Monday said that Shikha Sharma had herself requested the board to reconsider the period of her reappointment as MD and CEO of the bank to be revised from June 1, 2018 up to December 31, 2018. Shikha Sharma has been the CEO of the third largest private sector bank since 2009.
Below we have listed out 10 developments related to the matter.
1. Shikha Sharma's decision to quit in December came after the Reserve Bank of India has asked the Axis Bank to reconsider the appointment of CEO for the fourth term.
RBI's queries came more than eight months after the board approved Sharma's reappointment, following a board approval.
2. Now on Monday, the reports came that the Axis bank's Board has written to the Reserve Bank of India (RBI) saying that Sharma has requested them to shorten her fourth term to six months that will end by December as against an earlier approved three-year term that would have ended by May 2021.
3. Shikha Sharma did not give any reasons for the six month extension. The decision to quit from the position towards the end of the year has now triggered a hunt for her successor.
4. Shikha Sharma has been heading the bank for past eight years and 10 months, a period where she struggled to control the bank's non-performing assets (NPAs). However, she managed to increase the retail book to 46% of the total loan book to de-risk the portfolio, besides consolidating the bank offices in a brand new building called Axis House in Lower Parel from its earlier Cuffe Parade headquarters.
5. On March 6, the central bank revealed it has imposed penalties on two banks – Axis Bank for under-reporting non-performing assets (NPAs) and Chennai-based Indian Overseas Bank (IOB) for breach of know your customer (KYC) norms.
6. RBI slapped a penalty of Rs 3 crore on Axis Bank for violations of NPA classification and a fine of Rs 2 crore on IOB for breach of KYC norms on February 27, 2018. The penalty on Axis Bank was for under-reporting its NPAs by Rs 9,478 crore unearthed by the annual audit conducted by RBI.
7. RBI said in a release on Axis Bank, "Statutory inspection of the bank with reference to its financial position as on March 31, 2016, revealed violations of various regulations issued by RBI in the assessment of NPAs. Based on the inspection report and other relevant documents, a notice was issued to the bank in November 2017 advising it to show cause as to why penalty should not be imposed on it for failing to comply n with directions issued by RBI."
8. The corporate loan portfolio of the bank that turned NPA began to eat into the lender's profitability. Axis Bank witnessed over five-fold jump in NPAs in recent financial years. From Rs 4,110 crore in March 2015, the gross NPAs surged to Rs 21,280 crore by end of March 2017.
9. Shikha Sharma joined the bank in June 2009 with a five-year mandate which was subsequently extended. She succeeded PJ Nayak, who was known as the architect of the bank.
10. Before joining Axis Bank, Shikha Sharma was the first managing director and chief executive of ICICI Prudential Life.