RBI bars Axis Bank from importing gold, silver in current fiscal year

The Reserve Bank of India (RBI) has dropped Axis Bank, which has been one of the largest importers of bullion in India, from the list of lenders allowed to ship in gold and silver for the current fiscal year.

The action comes a day after reports said RBI asked the board of the third largest private sector lender to relook at the three-year fourth term offered to Shikha Sharma as the managing director and chief executive, citing a massive spike in bad loans.

The Axis Bank board had late last year re-appointed her for a fourth term beginning this June. She joined the bank from ICICI Bank in June 2009. During her stewardship the NPAs at the bank rose over fivefold to over 5.3 per cent in the December 2017 quarter.

The RBI published the list of 16 banks which have been allowed to import the precious metals on on its website, from which Axis Bank wasexcluded.

Axis Bank was one of the leading importers for gold and silver among all the 19 lenders which were given the licence last year.

Banks import raw gold and silver, and sell it to the trade participants. This activity helps a bank with fees and deepen its relationships with key clientele, according the industry analysts.

The spokespersons for neither Axis Bank, nor the RBI chose to comment on the development.

The 16 banks which have been given the licence to import gold and silver for FY19 also include the scam-hit Punjab National Bank.

The list also has other top private sector banks, including Axis Bank’s larger rival ICICI Bank which is fighting allegations of conflict of interest by its chief Chanda Kochhar, HDFC Bank, Kotak Mahindra Bank, Federal Bank and Yes Bank.

The State Bank of India leads the pack of state-run lenders, while there are also international lenders like the Industrial and Commercial Bank of China and Bank of Nova Scotia.

Other banks dropped for the current fiscal include the South-focused private sector lender Karur Vysya Bank and South Indian Bank.

Interestingly, Axis Bank had held on to the licence even after the allegations of wrongdoing by a few staffers during the demonetisation period.

Axis Bank shares rose 1.02 per cent to Rs 503.30 on the BSE, while the benchmark Sensex rose 0.35 per cent.