Max Life Insurance CEO and Managing Director Prashant Tripathy expects approval from the regulator on Axis Bank's proposal to increase its stake in the insurance firm to about 19 percent within the next three months.
In October 2020, the Reserve Bank of India (RBI) overruled Axis Bank's initial proposal to raise the stake to 29 percent and pared it to an aggregate of 19.02 percent.
The private sector lender planned to buy 29% stake in the insurer but changes had to be made in the deal following communication with IRDAI.
Tripathy mentioned Axis Bank's keen interest to raise its stake directly and through its subsidiary. "This particular transaction (is) in the permissible zone as per the RBI regulation, so it may not require any approval from RBI. It requires approval from IRDAI. We filed for IRDAI's approval about two weeks ago. It is under process. We should get approval in this financial year itself," he told PTI.
Currently, the bank holds about 1 percent stake in Max Life and is also the biggest distributor of the insurer's products through a banking channel. According to Axis Bank's reports, the products sold through the bank account for 54 percent of Max Life's total revenues.
"Under the revised agreements, Axis Bank will acquire up to 9.002 per cent of the equity share capital of Max Life, and Axis Capital Limited and Axis Securities Limited will together acquire up to 3 percent of the share capital of Max Life," the bank said about the limits stipulated under the applicable laws and regulations.
"In addition, Axis entities will have a right to acquire an additional stake of up to 7 per cent of the equity share capital of Max Life, in one or more tranches, in accordance with existing laws and regulations," the bank added, deeming its role as promoter to be of strategic advantage.
Tripathy also said that the bank being the promoter of this company is definitely of strategic advantage, he said. "While the branch network is already available with us, through this relationship there will be several other elements of governance, joint product development, IT integration, etc will also flourish and develop," he added.Also read:Facebook to remove false claims, conspiracy theories about COVID-19 vaccines