Axis Bank clarifies on share deal with Max Life Insurance: 'Obtained all necessary approvals'

Axis Bank on Thursday said it had obtained all necessary regulatory approvals for acquiring a stake in Max Life Insurance and that it will take required steps to defend itself against any "unfounded allegations". Axis Bank's clarification comes hours after it was reported that BJP MP Subramanian Swamy had moved the Delhi High Court, alleging a scam of nearly Rs 5,100 crore by Axis Bank, which he said made undue gains by way of transactions in shares of Max Life Insurance.

However, the lender rejected the charge saying, "Axis Bank believes that there is no material impact of the allegations being made against Axis Bank in connection with the said transactions." It further said: "Axis Bank adheres to the highest standards of legal and regulatory compliance, and we are committed to take actions in compliance with applicable laws."

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In August last year, the private lender said it would raise its stake in insurer Max Life to 16.2 per cent from 9.99 per cent by infusing Rs 1,612 crore through a preferential allotment of shares. Axis Bank along with its entities acquired a 12.99 per cent stake in Max Life in 2021, and through this new investment, they will own 19.02 per cent in Max Life.

Earlier this month, Max Financial Services Limited (MFSL) informed that insurance regulator IRDAI had approved Axis Bank's capital infusion of Rs 1,612 crore into Max Life Insurance.

Today, MFSL also issued a statement, saying all the shares transactions were "consummated post taking appropriate approvals from the respective regulators viz. RBI, IRDAI and CCI, wherever applicable".

"The Company had taken appropriate approvals from its shareholders in 2020 (with 99.99% affirmative voting from the shareholders) for cementing the long-term strategic partnership with Axis Bank in respect of Max Life which included certain transfer of shares of Max Life and that all adequate disclosures have been made in this regard," it said.

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MFSL said that regarding transactions involving shares of Max Life, market regulator Sebi had sought various details and clarifications from it and Max Life, and the requisite details had been submitted. "We believe that there is no legal or regulatory anomaly in the transactions and due process of law has been followed. The Company and Max Life shall take all requisite legal recourse to defend the matter before the Hon'ble Court," it said.

In his petition before the court, Subramanian Swamy has sought direction to probe the "blatant fraudulent acts" of Max Life and MFSL, in allowing their shareholder Axis Bank Ltd, and its group companies to make undue profits/gains from the purchase and sale of equity shares of Max Life in a non-transparent manner.

The petition states that the rot prevalent in the private sector banks is necessitated to be brought to light, inasmuch as, Axis and Max, are attempting to acquire shareholding in Max Life in unfair and non-transparent ways, that too, by manipulating the records and valuations to serve their interests.