Irdai imposes Rs 3 cr penalty on Max Life, Rs 2 cr penalty on Axis Bank

Regulator Irdai has imposed a penalty of Rs 3 crore on Max Life Insurance Company for certain violations in a case pertaining to purchase and sale of shares by the Axis Bank and group companies.

In another order, the Insurance Regulatory and Development Authority of India (Irdai) has imposed a penalty of Rs 2 crore on Axis Bank, a corporate agent of the insurer.

The penalty on Max Life Insurance is for violation of Irdai's direction, misrepresentation to obtain approval, and contravention of share transfer directions.

In the order, Irdai said "it is evident that Axis Bank has sold its stake of 0.998 per cent shares of Max Life in March 2021 to MFSL and MSI at Rs 166 per share. Subsequently, in March-April 2021, Axis Bank and its Group entities acquired 12.002 per cent shares from MFSL at a price range of Rs 31.51-Rs 32.12 per share. This is not in compliance with the directions issued by the Authority (Irdai)..."

MFSL is Max Financial Service Ltd and MSI is Mitsui Sumitomo International.

As per the order on Axis Bank matter, the penalty of Rs 2 crore has been imposed on the lender for making undue gains of substantial amounts by way of transactions in shares of Max Life Insurance and in violation of other norms.

Currently, Axis Bank and its two subsidiaries -- Axis Capital Ltd and Axis Securities Ltd -- collectively own 12.99 per cent of Max Life Insurance post approval of the deal in April last year.

Under the deal, the Axis entities also have the right to acquire an additional stake of up to seven per cent in Max Life, in one or more tranches, subject to regulatory approvals.