Nayak leaves behind fine record at Axis Bank

21 April 2009

Axis Bank Ltd's chairman and chief executive officer Pangal Jayendra Nayak ended his nine-year association with the bank, resigning in a huff on Monday, three months before his tenure ended, after he was overruled by the board on the appointment of Shika Sharma as its new managing director and chief executive.

Sharma was till Monday the managing director and chief executive of ICICI Prudential Life Insurance. Nayak's opposition to Sharma was reportedly because he felt that she was a career ICICI person and would upset equations at Axis. He favoured an insider for the post, and was backing Hemant Kaul, who heads the Axis Bank's retail operations. However, he was outvoted by the board nine to one, with himself the sole dissenter.

Nayak's track record is beyond question. After taking over as chairman and managing director of UTI Bank Ltd, the precursor of Axis Bank, in January 2000, he transformed what was perceived as a quasi-government bank into the third largest lender among private banks.

Since Nayak took over, Axis Bank's net profit has grown at a compounded annual growth rate of at least 40 per cent. Under him, growth in other key business parameters such as deposits, advances and total assets has also been impressive.

A former bureaucrat, he helped the bank to increasingly shift focus to quality assets, build a strong IT platform, cut costs and expand its network. As a result, Axis Bank's net profit for 2008-09 was up 60 per cent. The bank's NPAs are among the lowest, while its margins are among the best.

However, Nayak also has a reputation in the bank for being headstrong and autocratic. Insiders accuse him of not having done enough to build a second line of leadership. He had offered to resign at least twice earlier, but was persuaded to stay back.