Mumbai: V. Srinivasan, deputy managing director of Axis Bank Ltd and P.S. Jayakumar, chief executive officer (CEO) of state-owned Bank of Baroda are two of the three names that Axis Bank has recommended for its CEO post, two people aware of the matter said. The candidate, to be finalized by the Reserve Bank of India (RBI), will succeed Shikha Sharma as managing director and CEO of the country’s third largest private lender.
The names of Srinivasan and Jayakumar were recommended to RBI by the board of Axis Bank, following suggestions by Egon Zehnder, the headhunter hired for the purpose, the people cited above said on condition of anonymity.
Axis Bank had on Tuesday said its board has shortlisted three candidates to succeed Sharma, leaving the choice of selection to RBI.
In an email response, a spokesperson for Egon Zehnder said, “Due to confidentiality considerations, we do not comment on our client work.”
Srinivasan and Jayakumar could not be reached for a comment, and an email sent to Axis Bank remained unanswered.
The board of Axis Bank will announce the CEO candidate after it hears from RBI, the bank said in a filing with the stock exchanges on Tuesday.
On Wednesday, The Economic Times reported that potential candidates for the bank’s CEO position are speculated to be outsiders, including Zarin Daruwala, CEO for India operations at Standard Chartered Plc and Murali M. Natrajan, CEO of DCB Bank.
The report said, citing two unnamed people, that the bank’s nominations and remunerations committee believed that RBI was unhappy with the management, and hence would not be agreeable to an internal candidate even though there were suitable candidates for the job with inside knowledge of the bank.
The bank on Tuesday said it will make necessary disclosures as soon as it hears from RBI.
In April, Sharma had announced her decision to step down by the end of the year. Her term was originally supposed to end in June 2021. The bank’s board had given Sharma an extension of three years in December 2017.
She will be replaced by a new CEO at a time the bank has recorded a sharp rise in bad loans.
Analysts say the central bank’s asset quality review (AQR) in late 2015 led to a rise in bad loans for most lenders including Axis Bank. In the quarters that followed, it turned out to be among the banks worst hit by the AQR. The gross non-performing assets (NPA) ratio, which was 0.94-1.68% between June 2009 and March 2016, jumped to cross 2% for the first time since Sharma took over. It rose further to reach 5.28% by the end of 2017. During Sharma’s tenure, Axis Bank’s gross bad loans ballooned from Rs 915 crore to Rs25,000 crore.
The board of directors of the bank had written to the Reserve Bank saying Sharma has requested them to reduce her fourth term to December 2018, instead of May 2021, triggering a hunt for her successor.
Axis Bank has seen a spurt in non-performing assets (NPAs) by more than 300% in the past three years.