MUMBAI: Axis Bank said its board has shortlisted three candidates to succeed Shikha Sharma as the chief executive, but left the choice of selection to the Reserve Bank of India ( RBI ).The board would announce the CEO candidate after it hears from the regulator, it said in a filing with the stock exchanges.The board, after having got snubbed by the RBI when it turned down a three-year term for incumbent Sharma, was reluctant to finalise a candidate, said two people familiar with the matter. All are speculated to be outsiders, including Zarin Daruwala of Standard Chartered and Murli Natarajan of DCB Bank. They couldn’t be reached for confirmation.The Nominations and Remunerations Committee believed that the RBI was unhappy with the management, hence would not be agreeable to an internal candidate even though there were suitable candidates for the job with inside knowledge of the bank, said those people, who did not want to be identified.Speculation in the industry is rife that a former ICICI Bank executive and now the India head of Goldman Sachs, Sanjoy Chatterjee, could also be in the race. Although industry circles are speculating, independent confirmations from these candidates were not available.Industry observers said it is odd for the bank board to send names of three candidates and leave the choice for the regulator. This reflected the cautious stance the board is taking.In an exchange filing, the Axis Bank board said it has shortlisted three candidates for the post of CEO in an order of preference for approval from RBI, but did not disclose the names of the shortlisted executives. The bank said it will make necessary disclosures as soon as it hears from the RBI. Axis Bank shares rose 1.7 per cent to ?532 apiece. The announcement was made after market hours.In April, the bank had engaged executive search firm Egon Zehnder to find a suitable successor to Sharma, whose term came to an abrupt end because of the regulator’s reluctance to approve the Axis board’s proposal to extend her term.While the reasoning for the regulator’s reluctance is not known, it is believed that it was unhappy with a surge in bad loans and some systemic lapses in the bank under her watch. On April 9, Sharma had informed the board that she will not continue on her post after December.The board of directors of the bank had written to the Reserve Bank of India saying that Sharma has requested them to reduce her fourth term to December 2018, instead of May 2021, triggering a hunt for her successor.The bank flourished under Sharma’s leadership until things took a turn for the worse after RBI announced its asset quality review in December 2015. Axis Bank has seen a spurt in non-performing assets (NPAs) by more than 300 per cent in the past three years.There had been speculation about Sharma’s departure in June last year amid reports that the Axis Bank board had hired executive search firm Egon Zehnder to look for a CEO. But after talk that she was considering job offers from the Tata, Piramal and Bajaj groups, the board announced a fourth three-year term for Sharma till June 2021 in July, a year before the third one was to end.In the past year and a half, the bank has been penalized by RBI for incorrectly reporting bad loans. The asset-class divergence uncovered by RBI was Rs 9,480 crore in FY16 and Rs 5,633 crore in FY17. Laden with infrastructure loans, it has struggled to contain nonperforming assets and projections to analysts have missed their marks.