On the BSE, the stock soared 5.43 per cent to end at Rs 546.
Banking industry sources said Ms. Sharma, 59, cited "personal reasons" for her decision.
Sharma, who has remained at the helm of Axis Bank since the past eight years, was provided an extension by the bank till 2021 in the board meeting held on July 27, 2017. It may be noted that Axis Bank has seen a considerable increase in non-performing assets (NPAs), to the tune of 300 per cent, in the past three years. The Bank did not create much wealth for the shareholders in her tenure.
Axis Bank CEO Shikha Sharma plans on cutting short her tenure by almost two-and-a-half years. The bank's total income declined to Rs 14,314.63 crore during the December quarter.
In March, Axis Bank was fined Rs 3 crore for under-reporting its NPAs by Rs 9,478 crore, unearthed by the annual audit conducted by RBI. In the last few years, there was no major development, except for acquisition of Enam Securities in 2010. While it was partly because of the slowdown in the economy and key infrastructure sector not doing well, the bank saw a huge rise in its gross NPAs as compared to other banks.
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Sharma will leave on 31 December after its board granted her request to cut short her latest term of three years that begins on 1 June, the bank said in a BSE filing.
He pegs the core profit after tax (PAT) in Q4FY18 at Rs 4,906 million, a fall of 60 per cent over the previous corresponding period, and 33.5 per cent lower quarter-on-quarter (q-o-q) basis. However, a year later in December 2017, the net profit made a marginal jump to Rs 726 crore. Market expectations from both banks are muted, given the bad loan problem in the sector appears to be far from over.
The bank had come under the RBI radar, following which the central bank approached the bank's Chairman to reconsider Sikha Sharma's fourth term.
Earlier, Axis Bank said communications between the bank and the regulator are confidential. It stood at Rs 726 crore in the December 2017 quarter, according to an ET report.
Over the past two weeks, top ICICI Bank board members have responded to queries and held conference calls with several investors, assuring them that the bank adheres to corporate governance standards and that internal investigations are being carried out. Axis Bank officials at various branches across the country were arrested for allegedly converting old currency notes into new.