Axis Bank clarified on Friday, 20 September that Sebi order this week placed temporary curbs only on taking up any new assignments in the capacity of a merchant banker for its wholly owned subsidiary Axis Capital Ltd (ACL). On Thursday, the capital markets regulator restrained ACL from undertaking any new assignments in the capacity of merchant banker, arranger or underwriter for any issue of securities in the debt segment.
Securities and Exchange Board of India has not imposed any other restrictions and ACL will continue to operate all other business activities, including in the equity capital markets, M&A, private equity, and institutional equities domain, said Axis Bank in an exchange filing today.
It added, "ACL has already discontinued and has not taken any new assignments as a merchant banker in the debt segment in over a year now and is of the view that there is no material impact on ACL on account of the interim order."
In an interim order issued on September 19, Sebi has also asked ACL to reply within 21 days to the observations made in the order.
According to the interim order passed by Sebi's Whole-time Member (WTM) Ashwani Bhatia cited by Moneycontrol report, "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."
According to the order, ACL's transaction with regard to Sojo's NCDs was not part of issue management but of security enforcement mechanism, which essentially falls under the domain of debenture trustee (which in this case was Axis DT or ACL's sister concern), the report said.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
