Shares of Axis Bank and Max Financial Services remained in focus today after they issued clarifications on the Axis-Max Life deal following the filing of a public interest writ petition by Subramanian Swamy against the transaction in the Delhi High Court. Swamy on Thursday filed public interest litigation (PIL) against Union of India, Axis Bank, Axis Securities, Axis Capital, and others before the high court in connection with the sale and purchase of shares of Max Life Insurance Company.

Swamy in his PIL alleged that Axis Bank and its group companies have made “undue profits” from the purchase and sale of the equity shares of Max Life Insurance Company, a subsidiary of the publicly listed Max Financial Services. 

Refuting the allegations, Axis Bank in an exchange filing said that it obtained all necessary regulatory approvals in connection with these transactions. “We will also take required steps to defend Axis Bank 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,” it says in a BSE filing.

The private lender further says that it adheres to highest standards of legal and regulatory compliance, and is committed to take actions in compliance with applicable laws.

Max Financial Services in its clarification said the shares transactions were consummated post taking appropriate approvals from the respective regulators viz. RBI, IRDAI and CCI, wherever applicable.

“Further, in line with the letter dated August 31, 2023 submitted to the stock exchanges by the Company, we would like to reiterate that the Company had taken appropriate approvals from its shareholders in 2020 (with 99.99% affirmative voting from the shareholders) for cementing the long-term strategic partnership with Axis Bank in respect of Max Life which included certain transfer of shares of Max Life and that all adequate disclosures have been made in this regard,” the company says in an exchange filing.

The filing highlights the SEBI has sought various details and clarifications from the company and Max Life with respect to the transactions and the requisite details have been submitted to the capital market regulator for its consideration, from time to time as advised by it.

“We believe that there is no legal or regulatory anomaly in the transactions and due process of law has been followed. The Company and Max Life shall take all requisite legal recourse to defend the matter before the Hon’ble Court,” it adds.

Following the clarification, shares of Axis Bank opened a tad lower at ₹1,072 against the previous closing price of ₹1,072.6 on the BSE. In the early trade, the stock dropped 0.7% to ₹1,064.95, while the market capitalisation slipped to ₹3.3 lakh crore.

On the other hand, shares of Max Financial Services opened higher at ₹953, up 0.4% against the previous closing price of ₹948.90 on the BSE. The stock hit a high and low of ₹955.20 and ₹946.95 in early trade, while the market capitalisstion stood at ₹32,898 crore.

On Thursday, Axis Bank shares settled 2.11% lower at ₹1,072.60, while shares of Max Financial Services ended down 2.09% at ₹948.90 following the report of filing of a PIL by Subramanian Swamy.

Swamy moved court seeking a probe against the deal, alleging that Axis Bank made undue gains of ₹5,100 crore by way of transactions in shares of Max Life Insurance. The court will consider Swamy's plea against Axis Bank on March 13, as per Bar and Bench.

Swamy alleged that the transactions violated the mandatory directions of the Insurance Regulatory and Development Authority of India (IRDAI), demanding an investigation by a committee of experts into the matter.

Swamy mentioned in his PIL that Axis Bank group companies acquired 12.002% shareholding in Max Life at ₹31.51-₹32.12 per share for ₹736 crore, which was below the fair market value. “On simple calculation, resulting to make undue profits/gains from the purchase on the sale of equity shares of Max Life in a non-transparent manner, Axis Bank has unlawfully gained approx ₹4,000 crore.”

He further said the insurance regulator IRDAI slapped a fine of ₹3 crore on Max Life for misrepresentation, which is “negligible” compared to the total fraud committed.

In April 2021, Axis Bank and its subsidiaries, including Axis Securities and Axis Capital, together referred to as Axis Entities, had collectively acquired 12.99% of the equity share capital of Max Life at ₹35 apiece, with the right to buy an additional 7% stake in future.

(DISCLAIMER: The views and opinions expressed by investment experts on are either their own or of their organisations, but not necessarily that of and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.