New Delhi: The Reserve Bank of India has asked the Axis Bank board to reconsider the fourth three-year term it gave CEO Shikha Sharma last year, said several people aware of the development. They said it could presage a tightening of scrutiny on the appointment of bank CEOs by the regulator.
The Reserve bank has written a letter to Axis Bank chairman Sanjiv Misra and gave its reasons for urging a review. These included the bank’s performance and its deteriorating asset quality, they said, adding that the board is now considering 1-year term for Sharma, during which it will look for a successor. “The bank’s board follows a standard process for senior appointments and forwards its recommendations to the regulator.
The move comes as another private sector lender’s CEO is beset by allegations that her relatives may have benefited from loans given to them by one of the bank’s borrowers. Axis Bank has seen a spurt in non-performing assets (NPAs) by 336% in the past three years. The bank, which reported gross NPAs of Rs 1,173 crore at end of December 2009, saw them jump to Rs 25,001crore at end of December 2017.
In February last year, Sharma had refuted talk of a potential merger of Axis Bank with Kotak Mahindra Bank. She also led a $1.8 billion capital-raising exercise with global private equity major Bain in November last year that was the largest private equity transaction in India. Some analysts said however that the money may have to go toward provisioning requirements rather than fuelling growth.