After RBI-snub, Axis wants to cut CEO Shikha Sharma's tenure
In an unusual move, Axis, India's seventh largest bank, has sought permission from RBI to cut down the tenure of CEO Shikha Sharma from three-years to seven-months. This comes after the RBI reportedly expressed reluctance to approve the Board's request to reappoint her for a fourth term. It is speculated the RBI isn't happy with the bank's increasing bad loans and systemic lapses.
Sharma's career-path after moving out of IIM-A, at a glance
After doing an MBA from IIM-A, Sharma joined ICICI Bank in 1980. In 2000, she founded the ICICI Prudential division and headed it for nine years before changing gears. She moved to Axis in April 2009, succeeding PJ Nayak, who's credited with building the bank.
How Axis changed and grew under Sharma
One of Sharma's most significant moves at Axis was acquiring Enam Financial's brokerage and investment banking divisions for Rs. 2,067cr. Advances soared too, from Rs. 81,557cr in the March'09 quarter to Rs. 4.20L crore as of December'17. Under her aggressive leadership, retail lending rose from just 20% of the loan book to 45%. She also actively lent to infrastructure projects, boosting the bank's standing.
Simultaneously, a steep rise in bad loans
Simultaneously, bad loans increased steeply. In the past three years, non-performing assets (NPAs) surged more than 300%. In fact, gross NPAs went up from Rs. 1,173cr in December'09 to a whopping Rs. 25,001cr in December'17.Net profit also fell from Rs. 2,175cr in December'15 to Rs. 726cr in December'17.
There have been other violations too
RBI has penalized Axis for misreporting bad loans. In FY16, RBI's valuation of Axis' NPAs was Rs. 9,478cr more than the bank's classification. The gap was Rs. 5,632cr in FY17. This month, Axis was dropped from the RBI's bullion importers' list, preventing it from importing gold and silver. SEBI has also pulled up Axis for "inadequacy" of processes that led to leak of sensitive data.
RBI urges Axis to reconsider Sharma's appointment
There has been speculation since some time about a leadership change, but in December, Axis informed RBI it will reappoint Sharma as CEO for another three-year terms starting June 1, 2018. Earlier this month, RBI reportedly asked it to reconsider the decision citing the bank's deteriorating asset quality, among other reasons. Axis now awaits permission to end Sharma's term in December'18 rather than June'21.
