Sebi relaxes prior order of ban on Axis Capital managing debt securities

Securities and Exchange Board of India, in an interim September order, had banned Axis Capital from acting as a banker for new debt issues, alleging violation of rules

India's markets regulator directed Axis Capital on Tuesday to not provide any credit risk cover in transactions involving debt securities, relaxing its prior order that had barred the company from acting as a merchant banker to new debt issues.

The Securities and Exchange Board of India also ordered it to not provide guarantee or indemnity, which results in formation of a "structured secured credit transaction".

"I am willing to modify the interim direction...to limit the debarment to the activities alleged to be in violation" of the rules, Sebi member Ashwani Bhatia said on Tuesday.

The regulator, in an interim September order, had banned Axis Capital from acting as a banker for new debt issues, alleging violation of rules.

The regulator had then said Axis Capital provided a repayment guarantee to bonds worth $31.1 million issued by Sojo Infotel, a holding company floated by the majority shareholders of Indian phone manufacturing firm Lava Group, in March 2021.

However, the company was unable to pay the bondholders at the time of redemption in March 2024, with Axis Capital stepping in to pay the dues on outstanding bonds, which is not a permitted activity, Sebi had said.