Recently, the Delhi High Court witnessed a legal saga unfolding as Bharatiya Janata Party leader Subramanian Swamy brought forth allegations of financial irregularities amounting to approximately Rs 5,100 crore involving Axis Bank Ltd. The accusations revolve around transactions related to shares of Max Life Insurance Co., suggesting unjust profits made by the bank.
The case, presented before a bench comprising Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora, took a brief turn. However, it was adjourned to March 13, following Senior Advocate Mukul Rohatgi’s revelation that he had not received a prior copy of the petition, representing Axis Bank.
Swamy’s petition calls for the formation of a committee consisting of experts in the public interest to investigate the alleged fraudulent activities by Max Life Insurance and Max Financial Services Ltd. He alleges that Axis Bank and its group entities made undue profits from the purchase and sale of equity shares of Max Life, purportedly violating directives set by the Insurance Regulatory and Development Authority of India.
The petition raises broader concerns about the management of banks being entrusted to non-banking professionals lacking banking experience, while attempting to acquire shareholding through unfair and non-transparent means.
In response, Axis Bank clarified through an exchange filing that the allegations regarding the Rs 5,100 crore unjust gains in Max Life Insurance share deals had no material impact. The bank asserted that it had obtained all necessary regulatory approvals for the transactions involving shares of Max Life and pledged to take requisite steps to defend itself against any unfounded allegations.
The backdrop of the case includes Axis Bank’s acquisition of a 12.02% stake in Max Life Insurance in 2021, followed by a subsequent approval for further investment of Rs 1,612 crore in August the following year. This marked the second attempt by Axis Bank and group entities to acquire additional stake in Max Life.
It’s worth noting that in October 2022, the Insurance Regulatory & Development Authority of India had imposed fines, amounting to Rs 3 crore on Max Life and Rs 2 crore on Axis Bank. Max Life was penalized for misrepresenting facts to obtain approval for the transaction, while Axis Bank faced penalties for flouting directives and allegedly making undue gains in the deal.
The unfolding legal battle between Subramanian Swamy and Axis Bank adds a layer of complexity to the financial landscape, shedding light on the intricacies of regulatory compliance and corporate governance within India’s banking and insurance sectors. As the case progresses, it remains to be seen how the courts will adjudicate the allegations and their potential implications for the entities involved.
