The Delhi High Court has directed the Securities and Exchange Board of India and the Reserve Bank of India to expedite their investigation into allegations of fraudulent gains by Axis Bank Ltd. and its affiliates through transactions involving Max Life Insurance shares.
The directive, dated Aug. 12, comes in the wake of claims by former Union minister Subramanian Swamy, who alleged that Axis Bank unjustly profited approximately Rs. 5,100 crore from these transactions.
In an affidavit dated March 13, Swamy highlighted that the SEBI chairperson previously served as a director at Max Healthcare Institute Ltd. from February 2015 to April 2017. He argued that this past affiliation might have contributed to a delay in SEBI’s investigation into the alleged misconduct.
The court noted that, despite this personal allegation against the SEBI chairperson, she had not been named as a respondent in the petition. The court emphasised that past professional connections should not affect SEBI's regulatory duties and that if a market regulator's final decision is influenced by this connection, it could be challenged later.
The court also decided not to interfere further, given that SEBI and the RBI are already addressing the issue and the public company’s shareholders have approved the transactions in question. The court instructed SEBI and the RBI to complete their investigations as quickly as possible.
Swamy's petition claimed that Axis Bank and its affiliates, including Axis Securities and Axis Capital, made undue profits from the purchase and sale of Max Life Insurance shares in a non-transparent manner. The petition also raised concerns about regulatory compliance and management practices in financial institutions.
Axis Bank had responded by stating that the allegations have no material impact on its operations and that it has complied with all necessary regulatory approvals.
The controversy includes past regulatory actions, such as a Rs 3-crore fine imposed on Max Life by the Insurance Regulatory and Development Authority of India in 2022 for misrepresentation, and a Rs 2-crore fine on Axis Bank for violating directives and making undue gains.
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