The move comes against the backdrop of persisting concerns over mounting non-performing assets (NPAs) in the banking sector.Sources said the RBI sent a letter to Axis Bank Chairman Sanjiv Misra, who is also former expenditure secretary, regarding the board’s decision to re-appoint Sharma.

According to sources, the RBI letter also cited the bank’s performance and deteriorating asset quality condition over the years.

Shares of Axis Bank fell over 2.20 per cent on Monday to end at Rs 498.20 and its market valuation declined by Rs 27.62 billion to Rs 1.28 trillion on the BSE.

On the National Stock Exchange (NSE), too, the shares went down 2.24 per cent to settle at Rs 499.05. In terms of equity volume, 417,000 shares of the bank were traded on the BSE and over 7.1 million shares changed hands on the NSE.

In July 2017, the Axis Bank board had approved Sharma’s re-appointment. Her new term is to start from June. Sources said the re-appointment was yet to be ratified by the RBI.

According to the regulations, appointments of top management personnel at private sector banks require the RBI’s clearance.

“We wish to inform 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,” Axis Bank said in a statement on Monday.

The private sector lender’s NPAs jumped over fivefold in recent financial years.

Gross NPAs worth Rs 41.10 billion at the end of March 2015 surged to Rs 212.80 billion at the end of March 2017.

During the same period, the lender’s net profit halved from Rs 73.57 billion to Rs 36.79 billion. Recently, the RBI had penalised the bank for incorrectly reporting bad loans. The asset-class divergence uncovered by the RBI was Rs 94.80 billion in 2015-16 and Rs 56.33 billion in 2016-17.

Laden with infrastructure loans, the bank has struggled to contain NPAs. Last year, the Securities and Exchange Board of India had ordered Axis Bank to strengthen its systems and conduct an internal probe to fix responsibility as the initial investigation showed that the leakage of price-sensitive financial information was due to “inadequacy” of processes at the bank in the WhatsApp leak case.