Axis Bank CEO Shikha Sharma will step down in December 2018 – 30 months before her term was due to end. Sharma is the longest serving woman CEO in the financial sector.
The announcement of Shikha’s premature step down came after the Reserve Bank of India questioned on Axis Bank’s board’s proposal to appoint her for the fourth term from July 2018. On 8 December 2017, Axis board had informed the RBI of its decision to reappoint Shikha as the chief for three more years from 1 June 2018.
Last month, the anti-fraud agency, SFIO, had summoned ICICI Bank CEO Chanda Kochhar and Axis Bank’s chief Shikha Sharma in a bank fraud case related to over Rs 5,000 crore loan extended to diamond merchant Mehul Choksi.
Surprisingly though, Axis Bank on Monday announced that Sharma, who has been heading India’s third largest private sector bank since 2009, “had 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”.
It is believed that Sharma stepping down is a direct consequence of the RBI’s communication to the Axis bank board raising questions on her reappointment for a fourth term. Last month RBI announced that it had imposed a penalty of Rs 3 crore on Axis Bank for non-compliance with its directions on Income Recognition and Asset Classification (IRAC) norms back in fiscal 2016.
According to RBI’s audit, Axis Bank’s bad loans at the divergence were large and occurred for two consecutive years. For the Financial Year 2016, RBI’s classification of Axis Bank’s NPAs were 156% higher, or Rs 9,478 crore, compared with the bank’s own classification. The divergence was at Rs 5,632 crore for Financial Year 2017.