Mumbai: After setting up and heading India’s largest life insurance company —ICICI Prudential Life Insurance Co. Ltd—for nine years, Shikha Sharma took over as managing director and chief executive officer of the country’s third largest private sector bank, Axis Bank Ltd, in June 2009.
In a conversation with Mint, Sharma, 51, discusses her migration from insurance to banking and the challenges before Axis Bank. Edited excerpts:
New Goals: Shikha Sharma, who spent nine years heading ICICI Prudential Life Insurance, finds banking far more exciting. It provides a larger canvas, she says. Abhijit Bhatlekar/Mint
You have returned to banking after spending nine years in the insurance industry. How does it feel?
The first month was quite tough because I have never done commercial banking. When I was in ICICI, it was a development finance institution, though I have done many components of banking like project finance and structured finance.
From a regulatory perspective and structure of the balance sheet, it’s very different. Axis Bank is a well-established organization and you’re conscious of the fact that you don’t want to do anything to destabilize the platform. It’s like someone pushes you in the deep end of the sea and you don’t know whether to swim or sink; you just go with the flow and yet you have to learn alongside.
Axis Bank already has a very efficient platform. Your only challenge must be to scale up the business.
Yes, it’s a great platform and a very well-built business in certain segments. But India has a lot of growth opportunities and the challenge would be to capitalize on the platform and capture this.
I need to ensure that it continues to do well. When you scale up, there are some more institutional capabilities that need to be built in. I think in terms of processes, whether it’s human resource or service delivery, there is an opportunity to improve.
Had you taken over a relatively weak bank, you could have earned kudos by turning it around.
Let’s look at who I am and what I have done well so far in my career. I have done well with building businesses. I have actually never had to do a turnaround. My track record is of building (businesses). Hence, it’s great to take over a good platform in an industry that’s a high-growth one and then build on it. I am not looking for kudos at this stage of my career.
You had a long innings with the ICICI group. Would you want to bring in any of the best practices from there to Axis Bank?
I spent my first three months to understand the bank and its culture. It’s a solid bank with a strong, positive culture, and I don’t want to touch the culture. In fact, there is very little I want to change in the bank, whether it is at the culture level or the business verticals. My aim is to preserve what we have and build on it, rather than trying to copy anybody. You can learn some of the best practices but this need not necessarily be from a particular player within the sector. It could be from across sectors.
Axis Bank was late in reaching out to retail customers and the balance sheet is tilted towards corporate loans. Will there be any shift in strategy?
Corporate loans now account for about 50% of the book. When I see where the investment opportunity in the next 5-10 years is going to come from, I see infrastructure being a big driver of growth. Entrepreneurship will be another area of growth and increasing retail affluence will continue to fuel both savings and consumption. The rural economy is thriving and the rural market is getting integrated with (the) urban markets. These macro themes will drive growth.
What about retail banking?
Axis Bank has a very strong retail liability franchise. It started looking at retail assets only recently and this is an area where we would have to build our capabilities in terms of risk management and operational delivery. Currently, retail loans account for 20% of the total assets, but gradually, we could see retail assets grow faster.
What about rural business?
If we have to fully tap the rural markets, we have to look at a low-cost business model. I am not sure whether we can use the branch model to service this market. There have been some regulatory changes recently and we can use the business correspondent model.
With the Reserve Bank of India planning to issue more bank licences, how do you see the banking landscape changing?
It’s too early to comment on what this might mean as it depends on who are the participants and what kind of strategy they adopt. We already have a lot of banks in the country. If we have more well-established players with long-term objectives participating in a disciplined way, it could lead to growth in the market rather than competition.
Is there any building block that you need to make the bank a one-stop finance shop?
At this point of time, we have no intentions of adding any new business. We have a marketing subsidiary called Axis Sales and we are looking at introducing a retail broking platform through that subsidiary, subject to getting regulatory approvals.
Between banking and insurance, what is closer to your heart?
I had done insurance for nine years and, hence, the learning was tending to be at a margin. This (banking) is far more exciting. It’s a different platform, there’s a lot more to do. Banking does provide you a larger canvas.
At the end of your three-year term, where do you see Axis Bank?
The senior management team has put a five-year vision together. The world is changing so fast that it’s difficult to focus on number targets. Forget five-year planning; even the days of annual planning are over. Our vision is to be a preferred financial solution provider, excelling in customer delivery through empowered employees.
Axis Bank doesn’t want to be everything to everybody. We just want to be good at what we do and not No. 1, 2 or 3. We would want to create value (for) shareholders and to do this, we have to be a great employer.