Sebi On Axis Capital's Ban From Debt Merchant Banking Activities

Thursday, 19 September 2024, 07:41

Sebi on Axis Capital has resulted in a ban from debt merchant banking activities amid serious regulatory concerns. The Securities and Exchange Board of India discovered that Axis Capital provided unauthorized guarantees concerning non-convertible debentures. This measure poses significant risks to the financial system and could disrupt market functionality.
Indiatimes
Sebi On Axis Capital's Ban From Debt Merchant Banking Activities

Sebi On Axis Capital: Regulatory Action Explained

The Securities and Exchange Board of India (Sebi) has barred Axis Capital Limited from engaging in debt merchant banking activities until further notice. This action follows an inspection revealing that Axis Capital improperly provided guarantees related to the redemption of non-convertible debentures (NCDs) under the guise of underwriting, a violation of its regulatory mandate.

Concerns Over Financial System Stability

This interim measure aims to address potential disruptions caused by Axis Capital's high-risk transactions. As per the Sebi order, these activities threaten the orderly functioning of the financial market.

Context of the Regulatory Decision

  • Sebi's order followed a detailed inspection based on a January 16, 2024, news report.
  • The report titled 'Is Axis Capital an Investment Bank or a Hedge Fund?' raised alarms regarding ACL's transactions.
  • Axis Capital is a wholly owned subsidiary of Axis Bank and a registered merchant banker.

Recent Transaction Scrutiny

  1. Investigation centered on ACL's dealings with Sojo Infotel's listed NCDs.
  2. Sojo issued NCDs worth Rs 260 crore on March 25, 2021.
  3. Axis Trustee Services Ltd. served as the trustee while ACL facilitated the issuance.

Axis Capital may file its objections within 21 days, and the outcome could significantly impact its operational framework.


This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


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