- SEBI levied a fine of Rs. 5 lakh on Axis Bank for violating merchant banking norms.
- SEBI examined the debt market operations of Axis Bank between August 2016 to August 2019. It found the bank was in violation of provisions of Regulation 27 of SEBI (Merchant Bankers) Regulations, 1992.
On 24th March, the Securities and Exchange Board of India (SEBI) levied a fine of Rs. 5 lakh on Axis Bank for breaching merchant banking norms, the markets regulator stated in an order.
The violation
The market regulator SEBI stated that it examined the debt market operations of Axis Bank between August 2016 to August 2019. It found that the bank was in violation of provisions of Regulation 27 of SEBI (Merchant Bankers) Regulations, 1992.
Axis Bank during the three-year period acted as a merchant banker for 22 entities, subscribed to debt papers of nine companies without informing SEBI about the same 15 days from date of investment, as is the norm.
The non-banking finance companies Dewan Housing Finance, Indiabulls Housing Finance, Reliance Home Finance, Shriram Transport Finance, ECL Finance, L&T Finance and Tata Capital were the ones whose securities Axis Bank had obtained while acting as the merchant banker and without any prior notice to SEBI.
SEBI rejected Axis Bank’s settlement application
SEBI has permitted Axis Bank to present its case in a personal hearing and the lender presented its case to the regulator through lawyers. Later, Axis Bank stated that it had filed an application to settle the proceedings with the regulator. But, the market regulator rejected the settlement application and asked Axis Bank to provide further submissions in the case.
Axis Bank asks for forbearance
Axis Bank, in another submission to SEBI, again accepted that it had violated merchant banking protocols but sought some tolerance from the regulator by saying that the nine issues in question accounts for only a small proportion of whole merchant banking transactions. The lender said that the violation might have occurred due to concerned bank officials dealing with both merchant banking and investment functions of the bank.
The SEBI, however, found these violations were enough to warrant a penalty. SEBI has asked Axis Bank to pay Rs 5 lakh within 45 days.
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