Max Life Insurance and Axis Bank have modified some terms of their proposed joint venture (JV) in order to comply with regulatory norms.
The Insurance Regulatory and Development Authority of India (IRDAI) in June raised concerns over four clauses in the agreement, according to a Mint report.
"Max Life and Axis have made significant alterations in their proposed JV agreement to secure regulatory approvals and expedite closure of the deal. Max Life and Axis Bank have erased some key clauses in their agreement in order to convince IRDAI," a source told the publication.
Moneycontrol could not independently verify the story.
Axis Bank, Max Life Insurance and IRDAI had not yet responded to queries sent by Mint.
In April, Axis Bank said it will raise its stake in Max Life Insurance to 30 percent from 1 percent, after purchasing shares from Max Financial Services (MFS) for nearly Rs 1,600 crore.
The companies have removed a clause that proposed listing of Max Life Insurance after merging it with its listed parent company MFS, since it would have violated Section 35 of the Insurance Act, 1938, a source told Mint.
The report said the IRDAI had also objected to a clause permitting Axis Bank to appoint a observer in Max Life Insurance's board. This clause has also been scrapped.
Another clause been removed after IRDAI raised concerns, which gave the right to one of the two parties to appoint auditors in Max Life Insurance, the report added.
"Now, in the revised deal, both parties have agreed to allow equal rights to Max Life and Axis Bank," a source told the paper.
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