Sebi levies Rs 5 lakh penalty on Axis Bank

During this period, Axis Bank acted as a merchant bank for 22 debt issues launched by various companies.

The Securities and Exchange Board of India (Sebi), on Thursday, levied a penalty of Rs 5 lakh on Axis Bank for flouting merchant banking (MB) regulations. The matter dates back to a period between August 2016 and August 2019.

At that time, Axis Bank acted as a merchant bank for 22 debt issues launched by various companies. It had subscribed to securities in nine such issuances but failed to make requisite disclosure.

Rule 27 of the MB Regulations says that a merchant banker must submit to Sebi, complete particulars of the transaction with respect to the acquisition of the securities of the body corporate, whose issue is being managed by that merchant banker, within 15 days from the date of entering into such a transaction.

In its reply, Axis Bank had said that the non-reporting of the acquisition of securities in the nine debt issuances had come to light during an internal review and the same was reported to Sebi immediately. It further said that the prompt reporting of the omission showed the bonafide intentions on its part. Axis Bank also told the market regulator that it had taken necessary corrective steps to avoid recurrence of such lapses.

While acknowledging the steps taken by the bank, Sebi said one cannot “lose sight of the fact that noticee (Axis Bank), as a registered market intermediary, has failed to comply with the obligation cast on it under the MB Regulations for three consecutive years.”

Axis Bank also tried to settle the matter under the consent mechanism but it was not accepted by Sebi.