Sebi order on Axis Capital: Axis Bank says complied with regulatory norms

Bank's arm was restrained by Sebi from taking new assignment as merchant banker in debt segment

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Axis Bank has said that Axis Capital’s (ACL’s) activities were bona fide and in compliance with all applicable regulatory provisions, following Securities and Exchange Board of India’s (Sebi’s) bar on ACL from merchant banking in the debt segment.

In an exchange filing, the bank added that there has been no loss to any investor or market participant from Axis Capital’s activities.

“ACL has already discontinued and not taken any new assignments as a merchant banker, arranger, or underwriter for any issue/offer for sale of securities in the debt segment in over a year now. And, Axis Bank is of the view that there is no material impact on ACL on account of the interim order,” it added.

The bank added that ACL is evaluating all available legal remedies for the interim order.  

“Sebi has not passed any adverse direction or order against Axis Bank. Axis Bank is of the view that there is no material impact on the bank on account of the interim order against ACL. This is because ACL’s profit after tax (PAT) for FY24 was 0.70 per cent of Axis Bank’s consolidated PAT,” the bank added.

ACL will continue operating in all other businesses, including equity capital markets, mergers and acquisitions, private equity, and institutional equities.

In an interim order on Thursday, Sebi restrained Axis Capital from taking any new assignment as a merchant banker, arranger or underwriter in the debt segment. It is over the alleged violation of the norms.

Sebi had alleged that ACL provided guarantee or indemnity towards redemption of non-convertible debentures (NCDs) in the guise of underwriting. This is not permitted under the regulations.

Sebi has also forwarded its order to the Reserve Bank of India (RBI) for examining Axis Capital’s activities as a subsidiary of Axis Bank.

An inspection was carried out after a Sebi-registered research analyst flagged concerns.

Shares of Axis Bank remained muted in an otherwise bullish session for benchmark indices.