Axis Bank slips after Subramanian Swamy moves Delhi HC against Axis Max Life deal; lender refutes allegations

Axis Bank Share Price: Axis Bank shares slipped in morning trades on BSE on Friday (February 16, 2024) after ex-BJP leader Subramanian Swamy filed a petition in the Delhi High Court against the Axis Bank-Max Life deal. The bank defended itself, saying it had obtained all necessary regulatory approvals in connection with deal-related transactions.
The stock of the bank was trading down by 0.62 per cent, or Rs 6.70, at Rs 1065.90 at 9:54 am on Friday.

Why did Subramanian Swamy move Delhi HC against Axis Bank?

Former Rajya Sabha member Swamy filed a petition in the Delhi High Court against the Axis Bank-Max Life deal, accusing the lender of a scam of Rs 5100 crore.

He demanded an investigation by an expert committee, alleging that the bank got undue benefit from the deal.

In the petition, he raised questions about Axis Bank's transactions in Max Life.

He also raised questions about the role of the Axis Bank chairman in the deal.

Swamy has demanded the court make strict rules to prevent further scams.

The next hearing in the case is on March 13.

What did Axis Bank say?

In a letter to bourses, Axis Bank said that it would take the required steps to defend itself against any unfounded allegations. 

"Axis Bank believes that there is no material impact of the allegations being made against Axis Bank in connection with the said transactions. Axis Bank adheres to highest standards of legal and regulatory compliance, and we are committed to taking actions in compliance with applicable laws," said the bank. 

What was the Axis Bank-Max Life deal all about?

In April 2021, Axis Bank bought a 12.99 per cent stake in Max Life.

In 2021, 12 per cent shares were purchased at a price of Rs 31.51-Rs 32.12.

Before buying the stake, Axis Bank had sold its 0.998 per cent stake in Max Life to Max Financial and Mitsui Sumitomo International at a price of Rs 166 per share.

In October 2022, IRDAI imposed a penalty on Axis Bank and Max regarding the deal.

A penalty of Rs 2 crore was imposed on Axis Bank and Rs 3 crore on Max Life.

After the penalty, Axis Bank made changes to the deal with Max Life in January 2023.

Axis Bank would buy an additional 6.23 per cent stake in Max Life Insurance with 14.25 crore shares.

The stake would be purchased at a price of Rs 113.06 per share.

The total shares would be purchased for Rs 1612 crore.

The share of Axis Bank and group companies would increase from 12.99 per cent to 19.02 per cent.