SEBI Restrains Axis Capital from New Assignments Amid Alleged Norm Violations

The Securities and Exchange Board of India has prohibited Axis Capital, a subsidiary of Axis Bank, from taking new assignments as a merchant banker or underwriter in the debt segment due to alleged regulatory violations, until further notice.

The Securities and Exchange Board of India (SEBI) has issued an interim order restricting Axis Capital Limited (ACL), a subsidiary of Axis Bank, from undertaking any new assignments as a merchant banker, arranger, or underwriter in the debt segment due to alleged regulatory infringements. The prohibition will be in effect until further notice.

According to SEBI, ACL provided guarantees for the redemption of non-convertible debentures (NCDs) under the guise of underwriting, an activity not permitted under current regulations. SEBI emphasized that such activities pose risks to the financial system and could disrupt market order. Credit rating agencies had rated the instruments based on these guarantees, potentially misleading investors.

The order will be reviewed by the Reserve Bank of India to scrutinize ACL's operations as a banking subsidiary. SEBI's inspection of ACL was prompted by a report from a SEBI Registered Research Analyst highlighting concerns over a high-risk transaction. ACL has 21 days from receipt of the order to respond or request a personal hearing.

(With inputs from agencies.)