Earlier this month, Sharma had requested the board of the private sector lender that her tenure be curtailed.

Sharma, who had got a fourth extension from the Axis Bank board till June 2021, will now be in office till December 31, 2018, subject to Reserve Bank of India's approval.

In July last year, the board had extended her tenure as the managing director and chief executive officer by three years with effect from June 1 2018.

In a regulatory filing to the bourses after market hours, Axis Bank disclosed that its board has commenced the succession process to appoint a new managing director and CEO of the bank.

It further said that the board has appointed Egon Zehnder, a global leadership advisory firm, to conduct the succession process and evaluate candidates for the post.

The bank also disclosed that the board will ensure that the process is completed before the end of Sharma's tenure to "facilitate smooth transition of leadership responsibilities at the bank".

Ahead of the announcement, shares of Axis Bank ended lower by 1.49 per cent, or Rs 7.65, at Rs 505.85 on the BSE.

The board had earlier accepted the request of Sharma to curtail her tenure.

Sharma's request came amid reports of the RBI raising questions over her re-appointment in the wake of mounting non-performing assets (NPAs).

During the October-December quarter of 2017-18, Axis Bank's gross non-performing assets stood at 5.28 per cent, or a little over Rs 25,000 crore in absolute terms.

Axis Bank was also in the news for divergence in NPA reporting in 2016-17.

While gross NPAs as reported by the bank in that year stood at Rs 21,280.48 crore, the gross NPAs as assessed by the RBI stood at 26,913.28 crore, a divergence to the tune of Rs 5,633 crore. Similarly, in March, the banking regulator had imposed a Rs 3 crore penalty on Axis Bank for not complying with its directions on classification of NPAs.

In the preceding three months, while the percentage of gross NPAs was 1.21 per cent, it was Rs 1,131 crore in absolute terms.