Delhi HC Instructs Sebi, RBI To Expeditiously Conclude Axis Bank’s Max Life Transaction Investigation

The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi) instructed by the Delhi High Court to expedite their inquiry into claims made by Axis Bank and its affiliates that they obtained illicit gains through transactions involving shares of Max Life Insurance.

The notification, which was issued on 12 August, followed allegations made by former Union minister Subramanian Swamy, who stated that Axis Bank had unfairly benefited by almost Rs 5,100 crore from these transactions.

The Sebi chairperson formerly served as a director at Max Healthcare Institute from February 2015 to April 2017, according to an affidavit filed 13 March by Swamy. He highlighted conflict of interest as a delay in Sebi’s inquiry.

However, the court observed that the Sebi chairperson was not mentioned as a respondent in the petition, despite this personal accusation against her.

The court highlighted that prior professional links should not influence Sebi from carrying out its regulatory responsibilities and that a market regulator may subsequently face challenges if their decision is affected by such connections.

The public company's shareholders approved transactions, and the RBI and Sebi are already handling the matter, therefore the court also intended not to interfere. Sebi and the RBI directed by the court to expeditiously conclude their investigations.

Further, the private lender also stated that it complied with all regulatory approvals and that the claims have no meaningful effect on its operations.

The dispute involved previous regulatory proceedings, including a Rs 3 crore fine for deception against Max Life by the Insurance Regulatory and Development Authority of India (IRDAI) in 2022 and a Rs 2 crore sanction against Axis Bank for breaking rules and gaining unjustified profits.