The Delhi High Court has issued a directive to the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) to hasten their investigation into allegations against Axis Bank Ltd. and its affiliates. The accusations concern fraudulent gains made through transactions involving shares of Max Life Insurance.
Allegations of Unjust Profits
The court’s directive, dated August 12, follows claims by former Union minister Subramanian Swamy. Swamy alleged that Axis Bank unjustly profited by approximately Rs. 5,100 crore from the transactions involving Max Life Insurance shares. He contended that the gains were made in a non-transparent manner, raising concerns about regulatory compliance and management practices within financial institutions.
Swamy’s Affidavit and Concerns About SEBI’s Chairperson
In an affidavit dated March 13, Swamy pointed out that the SEBI chairperson had previously served as a director at Max Healthcare Institute Ltd. between February 2015 and April 2017. He suggested that this past affiliation might have contributed to delays in SEBI’s investigation into the alleged misconduct. Despite these personal allegations, the court noted that the SEBI chairperson had not been named as a respondent in the petition.
Court’s Observations on SEBI’s Independence
The court emphasized that past professional connections should not interfere with SEBI’s regulatory duties. It further stated that if the market regulator’s final decision is influenced by any such connection, it could be challenged later. The court decided not to intervene further, considering that SEBI and the RBI were already addressing the issue, and the public company’s shareholders had approved the transactions in question.
Axis Bank’s Response and Regulatory Fines
Axis Bank responded to the allegations by asserting that they have no material impact on its operations and that it has complied with all necessary regulatory approvals. The controversy also includes past regulatory actions, such as a Rs 3-crore fine imposed on Max Life Insurance by the Insurance Regulatory and Development Authority of India (IRDAI) in 2022 for misrepresentation, and a Rs 2-crore fine on Axis Bank for violating directives and making undue gains.
Conclusion
The Delhi High Court has instructed SEBI and the RBI to complete their investigations into the matter as quickly as possible, ensuring that regulatory oversight is not compromised by any external influences or past affiliations.
