Published: Tue, April 10, 2018
Economy | By Shawn Conner

Axis Bank imbroglio gives Kotak Mahindra Bank an opportunity: Nomura

Axis Bank imbroglio gives Kotak Mahindra Bank an opportunity: Nomura

In April 2017, RBI told banks to make a disclosure in their financial statements if the divergence between the bank's and the RBI's estimates exceeded 15%.

"From Axis Bank's perspective, we believe there will be limited push-back this time for any merger, given the loss of confidence that the regulator has expressed by not approving the renewal of the CEO's term and a vacuum in top management, " Nomura said.

Dhoot's firm raised a Rs 3,250 crore loan from ICICI Bank in 2012, which has now come under the lens over allegations of nepotism and conflict of interest.

Sharma's request to end her tenure early comes at a time when her bank has posted a sharp rise in bad loans.

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Mumbai: Shares of Axis Bank Ltd, India's third largest private lender, on Tuesday gained over 5% after its managing director and chief executive officer Shikha Sharma made a decision to leave at the end of the year. This meant that she would have continued on as the bank's chief until June 2022. However, it apparently ultimately decided against going for an outside person and granted Sharma a fourth term as CEO and MD. "We don't want banking to add to that complexity", Sharma had said.

The Axis Bank board on Monday accepted Chief Executive Officer Shikha Sharma's request to reduce her new term from three years to seven months, PTI reported. For FY16, RBI's classification of Axis Bank's NPAs were 156% higher, or Rs 9,478 crore, compared with the bank's own classification. In the last few years, there was no major development, except for acquisition of Enam Securities in 2010.

Sandeep Parekh of Finsec Law Advisor said while the allegations against ICICI Bank are serious, the Axis Bank case was just a performance issue. Axis Bank was the first to slip amongst the private bank, though other banks like ICICI Bank joined in later.

Kunal Shah, an analyst tracking the sector with Edelweiss Research expects the asset quality of the bank to remain under pressure for the March 2018 quarter with the RBI's dispensation on NPA recognition being a dampener to the overall headline numbers.

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Laden with infrastructure loans, the bank has struggled to contain NPAs.

The board cleared Ms Sharma's request to curtail her tenure at the bank after news reports suggested RBI objecting to her fourth term. Net profit fell to Rs 579 crore in the December 2016 quarter from Rs 2,175 crore in the corresponding period the year before. It stood at Rs 726 crore in the December 2017 quarter, according to an ET report.

Under Sharma's leadership, Axis Bank has received many awards particularly, "Bank of the Year in India" for the year 2014 by The Banker Magazine, Financial Times.

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