SEBI Lifts Ban Placed On Axis Capital, Eases Restrictions On Operations

Issuing a confirmatory order on Tuesday, the capital markets regulator said that Axis Capital is not allowed to carry out a specific kind of transaction in the debt segment until further notice

The Securities and Exchange Board of India relaxed the directions issued to Axis Capital earlier via an interim order. Issuing a confirmatory order on Tuesday, the capital markets regulator said that Axis Capital is not allowed to carry out a specific kind of transaction in the debt segment until further notice.

In the earlier interim order issued in September 2024, the authorities barred the entity from acting as an investment banker in debt market until further orders, reported Moneycontrol.

The recent order from the SEBI dated November 26, read, “ACL shall not carry out any transaction, which would involve ACL providing any credit risk cover (as contemplated in paragraph 10 of the Interim Order), guarantee or indemnity relating to purchase of pledged shares (as contemplated in paragraphs 11 and 12 of the Interim Order), or such that it results in a structured secured credit transaction (as contemplated in paragraph 18 of the Interim Order), in the debt segment, until further orders.”

Earlier, the authorities curbed Axis Capital from working in the debt segment after it evaluated whether the entity extended itself beyond activities allowed for a merchant banker with regards to the issue of listed non-convertible debentures (NCDs) of Sojo Infotel.

The order was passed by the regulator’s whole-time member (WTM) Ashwani Bhatia and noted, “ACL provided guarantee/indemnity towards redemption of NCDs in the guise of underwriting, which it was not permitted to do under the existing regulatory framework. Such activity poses risk to the financial system as it can potentially disrupt the orderly functioning of the market.”

In a personal hearing later on, Axis Capital’s legal representative urged that the ban including the entire debt market should be lifted and be limited to activities included in the interim order. The entity also said that it was willing to place voluntary restrictions from undertaking activities which the authority said were prima facie found to be in violation of the provisions of the Merchant Bankers Regulations, 1992.