RBI may have wanted her out of Axis Bank but Starbucks partner Tata Global Beverages is among four companies which brought Shikha Sharma on-board


  • RBI fined Axis Bank ₹30 million for fudging accounts during Sharma’s tenure as Axis Bank chief.

  • RBI asked Axis Bank to reconsider extending Shikha Sharma’s tenure urging a review.

  • Sharma is now an independent director at four companies-- Tech Mahindra, Dr Reddy’s Labs, Tata Global Beverages (which operates Starbucks chain in India) and Ambuja Cement.

It is very uncharacteristic of Reserve Bank of India (RBI) to give ‘advice’ to banks on their leadership. But last year, it did ask the country’s third largest private bank to ‘reconsider’ extending their then CEO Shikha Sharma’s tenure. After her exit , the stock of Axis Bank has gained over 48% in the last one year.

Since she left the bank last December, Sharma isn’t sitting home reading Mills & Boons, her favourite pastime. She is now an independent director at four companies, and the latest to add her is IT major Tech Mahindra after Dr Reddy’s Labs, Tata Global Beverages (which operates Starbucks chain in India) and Ambuja Cement.

Private Equity firm KKR appointed her as an adviser for their alternate investments. This is very good progress for someone who claims to have a ‘permanent inability to sell herself’. This trait kept her away from landing a job on the very first day of recruitment at IIM Ahmedabad.

The Benefit of Friends

Yet, Sharma has many high-profile friends in the system. She had worked with Kalpana Morparia, the CEO of J P Morgan at ICICI, who is a part of Nomination and Remuneration Committee (NRC) at pharma major Dr Reddy’s Labs. The company also has former Tata Power Managing Director Prasad Menon who was a part of Axis Bank board of directors until recently.

She is also part of the board of Tata Global Beverages, which operates Starbucks chain in India.

An independent banking analyst Hemindra wrote a report questioning the corporate governance practices of companies which have employed her. “The irony of publicly owned and listed blue-chip companies eagerly seeking Sharma for the prestigious position of independent director on their boards is that she had a poor track record and an unceremonious exit as chief executive officer of Axis Bank,” said a report by banking analyst Hemindra, who wrote a report on her.

However, companies have defended their decision to have Sharma on board. Tech Mahindra’s statement on June 14 said, “She has rich experience in banking, insurance and an excellent track record and led the bank on a transformative journey from being primarily a corporate lender to a bank with a strong retail deposit franchise and a balanced lending book.”

Hazari disagrees with Tech Mahindra’s take.

Though her stint at ICICI-- her first job since she was recruited from Indian Institute of Management (IIM) -- had many successes including building the India’s largest private sector bank’s insurance business, her leadership at Axis Bank had a lot left to desire.

E-mails sent to Tech Mahindra, Dr Reddy’s Labs and Tata Global Beverages did not elicit any response, while Sharma did not respond to a request for a call.

The Cover-up

Sharma’s plan for growth at Axis Bank’ was to increase large-sized corporate lending, that included a bunch of loans to infrastructure companies. Like all bad plans, it worked until it didn’t. The unrelenting chase for growth landed them in a bad soup with a large chunk of toxic loans.

What angered investors and the regulator alike is how the bank tried to sweep it under the carpet. So much so, the banking regulator Reserve Bank of India (RBI) had fined them-- even though a measly ₹30 million-- for fudging accounts. The regulator’s version of their non-performing loans is 156% higher than what was admitted by the bank in the year 2016-17.

Right after demonetization in 2016, the Enforcement Directorate unearthed a scam where Axis Bank staff was passing on unaccounted money into the system.

According to Hazari, these are due to poor operational risk controls and other lapses which were prevalent in the bank. He also said that the bank persecuted whistleblowers with draconian clauses, which can terminate an employee without giving any reason.

“Incorporating such harsh measures effectively silences any honest banker from complaining against any regulatory lapses which could disrupt the growth of business,” Hazari said.

It is within any company’s legal right to appoint anyone as an independent director. What experts like Hazari are questioning is the level of trust such boards can evoke when they appoint those whom regulators have recently shunned.

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