Mumbai: In her eight years and 10 months at the helm of Axis Bank Ltd, Shikha Sharma has managed to change the private sector bank’s image as a corporate lender by expanding its retail base, besides making key acquisitions.

After spending nearly three decades at ICICI Group across the bank, investment banking and insurance arm, Sharma took over as Axis Bank’s managing director and chief executive officer (CEO) in June 2009.

In July 2017, Sharma got her fourth extension as CEO for another three years. On Monday, Economic Times reported that the Reserve Bank of India (RBI) has written to the Axis Bank board to review the extension, citing poor performance and worsening asset quality at the bank.

It wasn’t a smooth beginning at Axis Bank for Sharma, with her predecessor P.J. Nayak having quit before the end of his tenure, opposing her appointment. This meant Sharma received no hand-holding in her new role.

Sharma made her big move a year later, when the bank announced the acquisition of investment banking firm Enam Securities Pvt. Ltd in November 2010. The deal valuation came under criticism.

In April 2012, the deal size was cut by almost one-third to Rs1,396 crore from Rs2,070 crore. Eventually, the deal paid off as Axis Capital, which was carved out of Enam business, grew to feature in league tables.

Meanwhile, getting more retail business became a priority, even as the bank continued to focus on corporate lending. This worked, as the share of retail loans in Axis Bank’s total book rose to 46% at the end of December 2017 from 21% in June 2009, the quarter when Sharma took over.

The story is same on the liability side as Axis Bank is now recognized as a lender with a strong franchise of low-cost current and savings account deposits.

Profits also rose steadily in the period.

On the corporate side, infrastructure lending also continued, given the opportunities it provided for most banks including Axis Bank.

Meanwhile, asset quality trends remained healthy.

However, analysts had expressed concern despite Axis Bank’s seemingly healthy asset quality with gross bad loan ratio below 2% and net NPA below 1%. That’s because its peers with similar infrastructure focus were reporting higher bad loan ratios and Axis Bank’s numbers were divergent from the broad sectoral trend.

Things were fine until late 2015, when RBI announced an asset quality review (AQR). In the quarters that followed, Axis Bank turned out to be among the banks worst hit by the AQR. Gross NPA ratio, which ranged between 0.94-1.68% between June 2009 and March 2016, jumped to over 2% for the first time since Sharma took over.

In the quarters that followed, Axis Bank turned out to be among the banks worst hit by the AQR. Gross NPA ratio, which ranged between 0.94-1.68% between June 2009 and March 2016, jumped to over 2% for the first time since Sharma took over.

It rose further to reach 5.28% by end of 2017. During her tenure, gross bad loans of Axis Bank have ballooned from Rs915 crore to Rs25,000 crore.

According to analysts, the stock of bad loans remained elevated because of divergence in reporting of NPAs by the bank and those assessed by the RBI.

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%.

Axis Bank, along with other leading banks, disclosed such divergences.

For fiscal 2016, RBI’s classification of Axis Bank’s bad loans was 156% more, or Rs9,478 crore, more than the bank’s own classification. Such divergence was at Rs5,632 crore for the March 2017 fiscal.

On 27 February, 2018 the RBI fined Axis Bank Rs3 crore for failing to follow its rules on classification of loans.

Apart from asset quality issues, Sharma had other crises to handle. During late 2016, when the government invalidated over 86% of the total currency in circulation, some staff of the bank came under investigation for alleged involvement in money laundering.

Last December, market regulator Securities and Exchange Board of India (Sebi) ordered Axis Bank to conduct an internal inquiry into a suspected leak of its June quarter financial results—they had found their way to WhatsApp groups a day after the results were finalized.

“It prima facie appears that the financial results of Axis Bank for quarter ended June 2017 were finalized by July 24, 2017, which was before circulation of the WhatsApp message on July 25, 2017," according to the Sebi order.

Between these two crises, Sharma announced her second acquisition in July 2017, this time in the digital fintech space.

On 27 July, Sharma announced Axis Bank’s acquisition of Snapdeal-owned mobile wallet FreeCharge in a Rs385 crore all-cash deal, strengthening its position in the payments space.

On the same day, the board gave her an extension as CEO for another three years starting June 2018, putting at rest speculation that she was leaving the bank.

That reappointment now seems to have drawn the regulator’s attention, according to reports.

On Monday, stock exchanges sought reply from Axis Bank on the ET story.

In its reply to exchanges, Axis Bank said, “In this connection, we wish to inform you that the bank’s board follows a standard process with regard to senior appointments, and forwards its recommendations to the regulator (to the extent required). This process is currently in progress. We have no further comments to offer as the report appearing in the media is speculative."