Axis Capital to explore legal remedies against Sebi's ban on debt segment

Axis Capital on Friday said it is exploring legal remedies against markets regulator Sebi's order restraining the firm from taking up new assignments as a merchant banker for the debt segment.

In a statement, the company clarified that Sebi has not imposed any other restrictions on Axis Capital and it will continue to operate all other business activities in the ordinary course in equity capital markets, infrastructure investment trusts (InvITs), real estate investment trust (REITs), M&A, private equity and institutional equities domain.

On Thursday, the Securities and Exchange Board of India (Sebi), in an interim ruling, prohibited Axis Capital from taking up any new assignments in the capacity of a merchant banker, arranger or underwriter for any issue or offer for sale of securities in the debt segment. This restriction will remain in place until further orders.

"ACL (Axis Capital Ltd) provided guarantee/indemnity towards redemption of NCDs (non-convertible debentures) in the guise of underwriting, which it was not permitted to do under the existing regulatory framework. Such activity poses risk to the financial system as it can potentially disrupt the orderly functioning of the market," Sebi stated.

Axis Capital, a subsidiary of Axis Bank, clarified that it has not taken on any new assignments in the debt segment for over a year.

Additionally, the revenue generated from its debt business in FY 2023-24 accounted for only 5 per cent of the company's total income.

"Based on the merits of the case and prevailing laws, Axis Capital is currently evaluating all available legal remedies regarding Sebi's interim order," the company said in a statement.

The firm further emphasised its commitment to compliance, risk management, and client interests.

"ACL believes in ensuring the highest standard of compliance with the extant regulations and is committed to adhering with all legal and regulatory requirements at all points in time. ACL has a robust business pipeline and will continue to deliver best-in-class execution for our clients," it added.