SEBI lifts ban on Axis capital and eases restrictions on operations

The Securities and Exchange Board of India has relaxed the directions issued earlier to Axis Capital through an interim order. Issuing a confirmatory order on Tuesday, the capital markets regulator said Axis Capital is barred from carrying out certain types of transactions in the debt segment until further notice.

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

SEBI’s recent order dated November 26 read: “ACL will not enter into any transaction which would involve ACL providing any credit risk cover (as per paragraph 10 of the Interim Regulation Regulation), a guarantee or indemnity relating to the purchase of pledged shares (as provided for in paragraphs 11 and 12 of the Transitional Regulation) or that results in a structured secured credit transaction (as provided for in paragraph 18 of the Transitional Regulation), in the debt segment, pending further orders. “

Earlier, authorities banned Axis Capital from operating in the debt segment after assessing whether the entity was exceeding the activities permitted as a merchant banker in connection with the issuance of listed non-convertible debentures (NCDs) of Sojo Infotel.

The order was passed by Whole Time Member (WTM) Ashwani Bhatia and noted that “ACL provided guarantee/security in connection with the redemption of NCDs in the guise of underwriting, which was not allowed to be done under the existing regulatory framework. “Such activity poses a risk to the financial system as it has the potential to disrupt the proper functioning of the market.”

At a subsequent in-person hearing, Axis Capital’s legal representative insisted that the debt market-wide ban be lifted and limited to the actions provided for in the interim order. The entity also stated that it was willing to impose voluntary restrictions on the undertaking of activities which the authorities considered to be prima facie in breach of the provisions of the Merchant Bankers Regulations 1992.