In response to a public interest writ petition filed in connection with Axis Bank’s stake acquisition in Max Life Insurance, the private sector lender clarified that it has obtained all necessary regulatory approvals and that the allegations are “unfounded”.

The petition was filed by former Rajya Sabha member and BJP leader Subramanian Swamy before the Delhi High Court, against the Union of India, Axis Bank, Axis Securities, Axis Capital and others. The case will next be heard on March 13.

“Axis Bank has obtained all necessary regulatory approvals in connection with these transactions. We will also take required steps to defend Axis Bank against any unfounded allegations,” it said in a statement.

The bank added that it expects no material impact of the allegations as it adheres to the highest standards of legal and regulatory compliance. “We are committed to take actions in compliance with applicable laws,” it said.

‘Undue gains’

The public interest litigation (PIL) alleges that Axis Bank made nearly ₹5,100 crore as “undue gains” by way of transactions in shares of Max Life Insurance. It also accused the life insurer and Max Financial Services of fraud as they allowed Axis Bank and its group companies to acquire shares in a “non-transparent manner”, which was in violation of IRDAI guidelines.

The petition contended that Axis Group bought 12.002 per cent stake in Max Life for ₹736 crore, at ₹31.51-32.12 per share, which is below the fair market value, helping the former make ₹4,000 crore. It also said that although IRDAI had penalised Max Life for ₹3 crore, the fine was “negligible” compared to the total fraud amount.

Max Life, in a statement, said that the shares transactions were consummated post approval from RBI, IRDAI and CCI, and its shareholders, and that all adequate disclosures have been made. It added that with respect to transactions involving shares of Max Life between Max Financial and Axis Bank, SEBI has sought various details/ clarifications which were 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 MFSL shall take all requisite legal recourse to defend the matter before the Hon’ble Court,” it said.

The plea demanded that the transaction be investigated by a committee of experts, with the prosecutor arguing that the Enforcement Directorate (ED) has come into action for much smaller offences but has not taken any action in this regard so far.

Axis Bank, along with its entities, had acquired over 12 per cent stake in Max Life in 2021. Earlier this moth, IRDAI approved the infusion of additional ₹1,612 crore by Axis Group into Max Life Insurance, which will take the fomer’s shareholding to 19.02 per cent. Further, Axis Bank will have the right to acquire additional 0.98 per cent stake from Max Financial, whose shareholding will fall to 80.98 per cent from 87 per cent.